(Wed 07 Apr 10)

Daimler (parent company of Mercedes-Benz) and the Renault-Nissan Alliance have announced an agreement which will see the two giants working closely together on a number of projects over the next few years.

The most obvious results of this will become apparent from 2013, with the launch of the a new smart and the next-generation Renault Twingo. Although they will certainly look different from each other, they will be based on the same rear-wheel drive platform, and production will be split between between the smart factory in France and the Renault plant in Slovenia. Electric versions of each car will be available right from launch.

There will also be a considerable amount of engine-swapping between the two concerns. Renault will supply three- and four-cylinder petrol and diesel engines to Mercedes, which will modify them for a forthcoming range of premium compact cars, while Mercedes will provide four- and six-cylinder engines, again of each fuel type, to Nissan's luxury brand Infiniti. A new entry-level Mercedes van will also be developed, based on a Renault and built at a Renault factory.

In addition to all this, Daimler, Renault and Nissan will co-operate on new engines, though the timescale for that has not yet been finalised, and there is also talk of close co-operation in the US, Chinese and Japanese markets.

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