DETROIT –

As part of the ongoing collaboration between the Renault-Nissan Alliance and Daimler, it was revealed Sunday that the two automakers will start building engines together in Tennessee two years from now.

The 4-cylinder Mercedes-Benz engine will be the first Mercedes-Benz engine to ever have been built in the North America Free Trade region, officials said.

They will be produced at Nissan’s plant in Decherd, Tenn., to be used in both Mercedes and Infiniti models. When it gets everything ramped up to the maximum, the plant’s installed capacity can hit 250,000 units annually.

And given the plant’s location, it can start offering a direct supply of engines that same year to the Mercedes C-Class models built not far away in Tuscaloosa, Ala.

“This is the newest milestone in our pragmatic collaboration and our most significant project outside of Europe so far,” stated Renault-Nissan chief executive officer 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.:

Dieter Zetsche, chairman of the Daimler board of management and head of Mercedes-Benz Cars, noted: “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,” he added. “Thus we are systematically broadening our manufacturing footprint in this important growth market.”