DETROIT – Nissan’s Decherd, Tenn., plant will build Mercedes-Benz four-cylinder engines for Infiniti and Mercedes-Benz starting in 2014. Nissan announced this new stage in the collaboration between Renault-Nissan and Daimler at the North American International Auto Show in Detroit. Production will begin in 2014, with an installed capacity slated for 250,000 units per year once production fully ramps up.

“This is the newest milestone in our pragmatic collaboration and our most significant project outside of Europe so far,” said Renault-Nissan CEO Carlos Ghosn. “Localized capacity reduces exposure to foreign exchange rates while rapidly enabling a good business development in North America – a win-win for the Alliance and Daimler.”

Nissan said this collaboration marks the first production of Mercedes-Benz engines in the North American free trade region. The automaker said the Tennessee plant’s strategic location and logistics links will ensure a direct supply of engines, starting in 2014, for the Mercedes-Benz C-Class, which is built at Daimler’s vehicle plant in Tuscaloosa, Ala.

Mercedes’ chairman of Daimler’s board, and head of Mercedes-Benz Cars, Dieter Zetsche, commented on how this development will impact that company’s strategy.

“In the context of our Mercedes-Benz 2020 growth strategy, we have decided that we will expand the production capacities required for this close to the customers. Through the strategic extension of our cooperation with Renault-Nissan we can realize near-market engine production in the NAFTA region on attractive economic terms and make optimum use of synergies arising from the cooperation,” Zetsche said. “Thus we are systematically broadening our manufacturing footprint in this important growth market.”

Nissan stated it began powertrain assembly in Decherd in 1997. Today, the company manufactures four-, six- and eight-cylinder engines for its lineup of U.S.-produced Nissan and Infiniti vehicles. The plant also houses crankshaft forging and cylinder block casting operations.