Canadian-Austrian auto supplier Magna Steyr will develop an entry-level model for Nissan's premium brand, Infiniti, company sources said.
The automaker and the supplier are expected to finalize an assembly contract for production at Magna's factory in Graz, Austria, in early 2012.
The Infiniti model is expected to be built on Mercedes's MFA architecture, which underpins the second-generation A- and B-class model lines, Automotive News Europe has learned from the companies' management circles.
Daimler will supplier numerous preassembled "complete parts" to Infiniti, sources said, which shows a deepening of the German automaker's 20-month-old alliance with Renault-Nissan. The automakers declined official confirmation of the information.
Audi A3, BMW 1-series rival
According to internal planning, about 50,000 to 60,000 units a year of the Infiniti could be built in Graz. The cars will be exported globally and will offer Mercedes's four- and six-cylinder diesel and gasoline engines, according to sources.
The Infiniti compact is expected to be positioned against the BMW 1 series and Audi A3. Infiniti's Etherea concept car offered an early look at the design of the Japanese automaker's future entry-level model when it debuted in March at the Geneva auto show.
The compact is an important part of Infiniti's growth strategy. According to Renault-Nissan CEO Carlos Ghosn, Infiniti is supposed to more than triple its sales to 500,000 units by March 2017.
If it achieves that target, Infiniti says it would have about 10 percent of the global luxury segment. The United States is Infiniti's largest market, followed by China.
With the choice of Magna Steyr as its contract manufacturer, Nissan seems to be ending plans to start its own production facility for Infiniti in Europe. By using Mercedes components, Infiniti avoids potentially huge development costs. In exchange, Mercedes receives licensing fees for each manufactured vehicle and benefits from economies of scale.