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Under the terms of the JV, Nissan would build the Dodge Hornet (top) for Chrysler to sell in European and the US markets, while the American automaker would in turn build a pick-up, based on the Titan (botton), for the Japanese firm at a factory in Mexico.

Fiat's potential partner in the US, Chrysler, has just put on hold a joint venture project that it signed up to with Nissan in April of last year, due to the worsening financial climate. Under the terms of the JV, Nissan would build the Dodge-branded Hornet, an efficient small car, for Chrysler to sell in European and the United States markets, while the American automaker would in turn build a pick-up, based around the existing Titan, for the Japanese firm, at its factory in Saltillo, Mexico.

However both firms are suffering dramatically from the global slowdown in car sales, and whilst Chrysler's sales are rapidly collapsing month-on-month, Nissan in the last quarter of 2008 posted its first loss in 14 years and is now cancelling a number of future projects as it reviews it forward strategy. The Japanese firm, which has a long standing strategic alliance with Renault, plans to trim its workforce worldwide by 20,000, and cut its production targets by 20 percent.

"Due to the current economic conditions, Nissan and Chrysler leadership directed their teams working on the two projects to work together in the first quarter of 2009 to improve the financial objectives for both companies before the projects move further forward," said Nissan in a statement. Chrysler added that its project team had been advised "to work together in the first quarter of 2009 to improve the financial objectives for both companies before the projects move further forward." A third project that will see Nissan building a version of its Versa sedan for Chrysler to sell in Latin American markets is to continue.

Chrysler's forthcoming access to a comprehensive range of Fiat's small car platforms renders the project to build the Dodge Hornet unnecessary, and Frank Klegon, Chrysler’s product development chief, speaking to reporters at the Chicago Auto Show this week admitted that the Nissan deal would lead to product overlap. With smaller cars in its product portfolio Chrysler would become a competitor in the United States to Nissan in this segment and it may be in the Japanese firm's interest to avoid assisting the America carmaker in its push into this key area.