Infiniti And Mercedes Cancel Plans For Jointly-Developed Luxury Compact Car

Infiniti and Mercedes-Benz parent company Daimler have allegedly suspended development of their luxury compact car that was supposed to be a joint effort.

Japanese publication Nikkan Kogyo claims that the two automakers have halted work on the joint model due to consumers now demanding utility vehicles. Additionally, uncertainty over tariffs in the United States are thought to have played a role in the project’s termination.

The Renault-Nissan Alliance and Daimler committed to a share-trading partnership in 2010, and one of the vehicles anticipated to launch from this collaboration was a compact vehicle.

Automotive News reports that the vehicle would have been produced at a company facility in Aguascalientes, Mexico. If the plan to build the car were to have gone ahead, Mexican production would have opened it up to possible duties that could arise from the U.S. government’s desire to renegotiate the North American Free Trade Agreement (NAFTA).

The Mexican factory is a 50/50 joint venture between the two groups. Production of the Infiniti QX50 crossover has already commenced there, and soon, Mercedes-Benz will build its next-generation compact cars there.

Despite the canceled compact car project, Infiniti spokesman Trevor Hale said the partnership between the automakers remains important.

“The cooperation between the Renault-Nissan-Mitsubishi Alliance and Daimler is solid and we continue to reap the benefits of our successful cooperation, which includes a number of R&D and manufacturing initiatives around the world.”

Through the share-trading partnership, Nissan owns a 1.55 per cent stake in Daimler, while Daimler holds 3.1 per cent of Nissan. Additionally, Renault has a 1.55 per cent share of Daimler and the German brand has a 3.1 per cent share in Renault.