Nissan, Mitsubishi Motors Confirms Equity Talks

Nissan Motor Co. and Mitsubishi Motors Corp. have confirmed they are discussing a possible Nissan investment that would give the company a controlling 30% stake in MMC. The boards of each company are meeting separately today to discuss the option.

A deal could give MMC a new source of funding and help rebuild the company’s reputation after it disclosed last month that it has overstated fuel economy ratings for some cars sold in Japan—including minicars it makes for Nissan—for 25 years. Minicars account for 40% of the Japanese passenger vehicle market.

Analysts note that a tie-up also could help MMC bolster its model lineup, especially in the U.S., with Nissan-based models. The investment also would solidify Nissan’s supply of MMC-made minicars, give it access to Mitsubishi’s superior sales operations in southeast Asia and help the two companies cut costs on “green” powertrain development.

Media reports say Nissan will pay more than 200 billion yen ($1.8 billion) for the 30% stake. Analysts point out the investment is a relative bargain, because the scandal has dropped MMC’s share price more than 40% over the past three weeks.