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Nissan, Mitsubishi Motors announce deeper ties
December 14, 2010 / 7:55 AM / in 7 years

Nissan, Mitsubishi Motors announce deeper ties

TOKYO (Reuters) - Nissan Motor Co (7201.T) and Mitsubishi Motors Corp (7211.T) said they would deepen their operational ties to make better use of their resources as a strong yen makes competing tougher for Japanese automakers.

Nissan and Mitsubishi, Japan’s No.3 and No.6 automakers in 2009, have been working together since 2003, mainly involving Mitsubishi Motors’ building 660cc minivehicles under Nissan’s badge in Japan.

Automakers around the world are actively seeking operational partnerships to save costs by sharing vehicle platforms and components. Nissan and its 43 percent owner, Renault (RENA.PA), earlier this year joined hands with Daimler (DAIGn.DE) to share vehicles and engines with the maker of Mercedes-Benz cars.

As yen strength persists and domestic sales contract, Japanese automakers are losing money producing vehicles at home and are looking for ways to trim costs, including shifting at least some production to lower-cost markets overseas.

But they are also under political pressure to protect jobs at home and keep factories in Japan open.

Under the new agreement, Nissan will provide a light van to Mitsubishi Motors for the Japanese market, while Mitsubishi will supply an SUV to Nissan for sale in the Middle East, they said.

Discussions are also underway for the production of Nissan’s Navara pickup truck at Mitsubishi’s Thai factory, and for the establishment of a 50-50 joint venture to develop and produce 660cc minivehicles for Japan.

Nissan said it was also considering providing Mitsubishi Motors with higher-end models in Japan.

“This agreement is important for Nissan as it supports our expansion in emerging markets, meets immediate needs overseas, and enables us to grow our minicar business in Japan,” Nissan CEO Carlos Ghosn told a joint news conference with his Mitsubishi counterpart, Osamu Masuko.

“In the global auto industry, cooperation on specific projects among automakers is becoming increasingly common. It is a signal of how our industry is evolving to sustain success over the long term,” Ghosn said.

Both presidents said they were not considering a capital tie-up, but added they would continue to look for more opportunities for cooperation.

Earlier this year, Toyota Motor Corp (7203.T) also said it would enter the minivehicle segment, which is unique to Japan and accounts for 35 percent of the shrinking market.

MITSUBISHI MOTORS SHARES SOAR

To reduce costs, Nissan has already started to import the March subcompact sold in Japan from Thailand this year, while Mitsubishi Motors plans to do the same with its “Global Small” car to be built in the Southeast Asian nation from 2012.

News of the joint news conference pushed shares of Mitsubishi Motors up 8.5 percent to 128 yen by the close of trade in what one analyst attributed to buying by retail investors sensitive to news flow on the low-priced stock.

“We’re seeing an influx of individual investors to the market and as they’re more active, smaller stocks tend to get a bigger boost,” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

Nissan ended up 0.3 percent, roughly in line with the benchmark Nikkei .N225 average.

Mitsubishi’s Masuko has promised to announce a new mid-term business plan by the end of this month, to outline the company’s growth strategy over the next few years.

Mitsubishi Motors is burdened with factories in the United States and the Netherlands that are severely underused.

Additional reporting by Tim Kelly and Antoni Slodkowski; Editing by Joseph Radford

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