America's car companies are making it harder than ever to be "patriotic" these days -- and I'm an easy sell. "Proud to be an American?" Sure. "Made in the U.S.A."? Sign me up; it beats the heck out of buying lead-coated Chinese products with a tasty antifreeze filling any day.
But with Ford
My head hurts
Yeah, mine too. Better pop a couple Advil, though, because things are about to get even more confusing. No-longer-public "American" automaker Chrysler announced yesterday that it is teaming up with Nissan to build cars tag team-style.
For its part, Nissan has found sales of its new Titan pickup truck a bit underwhelming. Introduced in 2003 and expected to quickly ramp up to 100,000 in annual sales, the Titan is already falling short. So far this year, U.S. sales of the full-size pickup are down 40% -- a decline five times as large as that of the truck market overall. Rather than buck the tide, Nissan is throwing in the towel and outsourcing truck building to the people who know it best -- namely, the Americans. Specifically, Chrysler.
In 2010, Nissan will halt production of its own trucks in North America, as Chrysler takes over the job of building Nissan's new trucks at Chrysler factories that could sorely use the work (Chrysler truck sales dropped 22% in March). More or less simultaneously, Chrysler will tap Nissan for its area of expertise: small cars. Nissan will begin building a new small car for Chrysler to sell as its own.
I'm going to punt on the great question of the day: whether all of this is some sort of prelude to an eventual tie-up among Chrysler and Nissan, to complement Nissan's other alliance with Renault. I'm also going to punt on the question of whether yesterday's news shows that GM missed its chance to work a similar deal with Nissan's Carlos Ghosn two years ago. (But if asked, my answers would be "yes" and "yes.")
For now, I'll limit myself to just applauding the decision. Whatever their future plans, Chrysler and Nissan are making a smart move here. Each will focus on its strengths, boosting productivity at factories geared to produce the vehicles they build best. The way I see it, that can't help but be good for profit margins at each automaker -- and for their investors, too.
For related Foolishness on the auto industry, read:
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Fool contributor Rich Smith is sad to report that his old Chevy S-10 has finally kicked the bucket. So he's back in the market for a good used pickup. Got an offer? Drop him a line. He does not own shares of any company named above. Nissan is a Global Gains recommendation. The Motley Fool has a disclosure policy.