With Chrysler announcing a deal last week that would allow the struggling U.S. automaker and its Japanese counterpart Nissan to make cars for each other, industry experts are wondering if a bigger alliance isn’t far off.

Chrysler, which was spun off by former German parent Daimler AG in 2007 to private equity firm Cerberus Capital Management (Daimler still owns a rougly 20 percent stake) , is not in the best position to grow globally without a partner. And overseas, of course, is where the growth is.

U.S. auto sales, hurt by higher gasoline prices, a weak housing market and a subprime mortgage crisis, are expected to dip to their lowest level in a decade (and could hit their lowest point in 15 years) in 2008.

So U.S. automakers are looking offshore to increase sales. General Motors, which saw more than 50 percent of its sales come from overseas last year, has said it expects that growth to continue, with overseas sales far surpassing domestic numbers.

Chrysler needs to become a global player if it wants to compete with GM, Ford, Toyota, or really, any other major automaker.

And for that, Chrysler — which sells barely any cars overseas – needs a foreign partner. The beginnings of that are visible in the deal with Nissan.

Under the new alliance, Nissan will build a small car for Chrysler. And Chrysler will build a full-sized pickup truck for Nissan.

That takes care of the lack of a small car in Chrysler’s protfolio. But Chrysler could also face a cash problem. The automaker needs cash to work on new technology and increase fuel efficiency to meet future standards. (Congress passed a new energy law in December 2007 that requires automakers to increase fuel economy across the industry to 35 miles per gallon by 2020 — up 40 percent from current levels. GM has said that would add, on average, $6,000 to the price of vehicles sold in the United States).

Already, Chrysler relies on Daimler for clean diesel engines and on General Motors for hybrid technology. After the purchase, Cerberus did set aside a block of money for Chrysler but that money is not going to last forever, especially when the company’s operations are burning cash. (When reporting annual results, Daimler said Chrysler sustained a net loss of about $2.9 billion between the close of its spinoff on August 4 and the end of the third quarter in 2007. Chrysler disputes those figures but is not willing to provide its own.)

A more permanent alliance with Renault-Nissan could go a long way toward helping Chrysler compete in today’s market. Chrysler could also use Renault-Nissan to get lower prices on parts and raw materials.

And Renault-Nissan CEO Carlos Ghosn is not averse to partnering with U.S. automakers.  In 2006, encouraged by billionaire investor Kirk Kerkorian, Ghosn engaged in talks with GM’s CEO Rick Wagoner for a possible alliance that could include Renault-Nissan taking up to a 20-percent stake in GM. The talks fell through after GM decided the terms were not satisfactory.

With Renault-Nissan and Chrysler, the question is: can it work? Nissan is already part of a previous merger with French automaker Renault. CEO Carlos Ghosn is credited with making Renault-Nissan work in ways experts had never imagined.

But getting a French company to work with a Japanese company is complex enough. Add to that an American company and things could get really complicated.

That said, in the long run it may be Chrysler’s best option. Former Chrysler President Thomas Stallkamp has said that Chrysler was not capable of standing alone in 1998 when the deal with Daimler was done.

Things are different today. Competition is stiffer, the market is more saturated and the demand for technology is greater. If Chrysler could not stand alone then, it’s anyone’s guess how it can stand alone now.