Daimler and Renault-Nissan are building a new plant in Mexico to produce small cars. The entity, COMPAS, is run by a board of executives from both companies.

Daimler AG and the Renault-Nissan Alliance are pointing their compass south of the U.S., or more precisely their putting COMPAS in Mexico to build compact cars for them.

The companies announced that they’ve formed COMPAS (Cooperation Manufacturing Plant Aguascalientes), a 50-50 partnership that will “oversee the construction and operation of a manufacturing plant for the production of next-generation premium compact vehicles for the brands Mercedes-Benz and Infiniti.”

The two automakers announced last fall they would team up to find a way to build small cars in Mexico, but did not provide any substantive details at the time. The new entity will build a $1 billion plant – each kicking in half of the funds – on the grounds of Nissan’s plant in Aguascalientes. The new plant will be built alongside Nissan’s existing plant in the central Mexican city of Aguascalientes.

When completed in 2017, the plant will produce small cars for Infiniti, Nissan’s luxury unit, with Mercedes-Benz models rolling off the line in 2018. By 2020, COMPAS expects 230,000 vehicles annually will be manufactured there, and it could potentially be expanded.

Nissan's facility in Aguascalientes, Mexico, will get a new plant that will build compact cars for Nissan and Mercedes-Benz.

The future products are expected to be versions of such models as the Infiniti Q30 and QX30, and the Mercedes-Benz CLA and GLA, analysts have told TheDetroitBureau.com.

COMPAS is led by an international management team from Daimler and Nissan: Ryoji Kurosawa is Chief Executive Officer; Uwe Jarosch is Chief Financial Officer; and Glaucio Leite is Chief Quality Officer.

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“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 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.

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While the new plant will produce small cars, the two companies claim the products rolling off the line will be dramatically different vehicles. They also note other locations around world will produce the same vehicles.

This is just the latest partnership between the two automakers. In fact, the Mercedes new C-Class and the Infiniti QX30 crossover are directly impacted by an expanding alliance between the makers. The latest C-Class can be ordered with a new engine produced by Nissan. Meanwhile, Infiniti is preparing to launch several models that will ride on platforms developed by Mercedes.

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The pair is limiting their partnership to small cars and crossovers. They’re expected to jointly produce a 1-ton pickup truck for Nissan and Mercedes before the end of this decade. The Mercedes-Benz pickup will share some of the architecture with the all-new Nissan NP300, but it will be engineered and designed by Daimler to meet the specific needs of its customers. The vehicle will have all of Mercedes-Benz’ distinctive characteristics and features.