NISSAN Motor Co, Japan's third- largest auto maker, may expand its partnership with Chrysler LLC beyond a current agreement to supply the United States company with small cars in exchange for pickups.

"We continue to explore opportunities to work with Chrysler, but have nothing to announce at this point," Pauline Kee, a Tokyo-based Nissan spokeswoman, told Bloomberg News yesterday.

The auto makers were in talks about producing a mid-sized sedan to be marketed in the US under a Chrysler brand, The Wall Street Journal reported, citing insiders.

Chrysler is scrambling to add fuel-efficient models after US$4-a-gallon gasoline caused its US sales to plunge 23 percent this year in July.

"Chrysler has no money for R&D to design new cars so they desperately need Nissan's help," said Yokoi Hirofumi, a Tokyo-based analyst at consulting company CSM Worldwide.

Nissan would also benefit from getting Chrysler light trucks, as these were more profitable than cars,Hirofumi said.

Chrysler was focusing its own engineering on developing new trucks, The Journal said.

Chrysler's Shanghai-based spokeswoman, Daphne Zheng, didn't answer phone calls yesterday.

The two firms agreed this year to supply each other with vehicles. Nissan will receive Chrysler pickups from 2011 and supply a new compact-car model to Chrysler starting in 2010.

Chrysler, which got 70 percent of US sales from trucks, was "aggressively" working on new models and alliances with other auto makers, Chief Executive Officer Robert Nardelli said last month. The company may add new vehicles next year, he added.

The firm may follow Ford Motor Co in offering fuel-efficient sedans designed by a Japanese auto maker in the US. Ford's Mercury Milan is based on a model built by Mazda Motor Corp. Ford owns a third of Mazda.

Carlos Ghosn, head of Nissan and Renault , is trying to add a US auto maker to his Japanese-French alliance.