Daimler and the Renault-Nissan Alliance announced a 50-50 joint venture collaboration that will establish a manufacturing plant operation in Aguascalientes, Mexico.

The new business called COMPAS, which stands for Cooperation Manufacturing Plant Aguascalientes, will find the two companies investing a total of $1 billion to produce the next-generation premium compact vehicles for the brands Mercedes-Benz and Infiniti.

The state-of-the-art plant will be located near the Nissan Aguascalientes A2 plant. It will have an initial annual production capacity of more than 230,000 vehicles and will create about 3,600 direct jobs by 2020. Depending on the market development and customer demand, there will be the potential to add additional capacity. Production of Infiniti vehicles will begin in 2017, first Mercedes-Benz vehicles will roll off the line in 2018.

“COMPAS is an outstanding example of the global reach of the Renault-Nissan Alliance and Daimler cooperation. Together we are combining the manufacturing expertise of Nissan and Daimler in one production plant in Mexico for the production of next-generation premium compact cars,” said COMPAS CEO Ryoji Kurosawa.

“Aguascalientes was selected as the location for this new plant thanks to the state’s well-established supplier base and Nissan’s track record in highly efficient manufacturing in Mexico for more than three decades,” he added.

“With COMPAS, Mercedes-Benz Cars will for the first time have a production location for compact cars in the NAFTA region and will thus be able to serve its customers close to the market in a flexible and efficient manner,” said COMPAS CFO Uwe Jarosch.