Nissan, M'bishi Motors mull tie-up
Report: alliance to include joint development
By Osamu Tsukimori, CBS MarketWatch.com
Last Update: 9:41 PM ET Dec. 5, 2004
TOKYO (CBS.MW) - Nissan Motor Co. and Mitsubishi Motors Corp. said Monday they are mulling a business alliance, and a published report said the broad-based tie-up would inlude jointly developing and producing minicars and compact cars.
The companies said nothing concrete has been decided.
The Nihon Keizai Shimbun reported that under the plan, Nissan will also supply luxury vehicles to Mitsubishi in Japan and other markets on an original equipment manufacturing basis, in order to help the struggling carmaker make up for the lack of new products.
Mitsubishi is now reviewing a business rehabilitation plan it drew up in May and the alliance with Nissan will form the core of the revised plan, the Nikkei report said.
Under the plan, the two firms will also create a new company by the end of 2005 for joint production of minicars, the report said.
The new firm's capitalization and investment ratio have yet to be decided, but Mitsubishi is expected to provide its production facility at the Mizushima plant, Okayama Prefecture, as an investment in kind, the Nikkei report said.
The tie-up with Nissan would enable Mitsubishi to raise capacity utilization rates at the factory and save on new car development costs, the report said.
Nissan, meanwhile, hopes the alliance will allow it to make a full-scale entry into the minivehicle market, a segment it regards as crucial to achieve the goal of raising global sales by 800,000 units during the three years starting in April 2005, the report said.
By the midday break, shares of Nissan fell 1.2 percent, while Mitsubishi Motors rose 1.8 percent in Tokyo. The Nikkei Average was down 0.6 percent.
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