Nissan, Mitsubishi strengthen ties in Japan

By Dow Jones Newswires
Posted Dec. 14, 2010 at 9:52 a.m.

Nissan Motor Co.  and Mitsubishi Motors Corp.  said Tuesday that they will supply more models to each other and explore  jointly developing vehicles as they look to spark sales in the sagging Japanese market and to meet increasing demand in emerging markets.

The two Japanese carmakers said that Nissan will provide a light van and upper-end sedans to Mitsubishi Motors to broaden its lineup in the domestic market, while Mitsubishi will provide a sport-utility vehicle model to Nissan to enhance its growing SUV segment in the Middle East.

The two companies are discussing details such as when, what models and how many vehicles to provide, a Nissan spokesman said.

Under their current partnership, Nissan produces its AD commercial van for Mitsubishi, which produces four models for its partner including its eK Wagon and Minicab mini vehicle models for Nissan. These models are sold under the brands of the sellers.

Japanese carmakers need to reduce costs and spur domestic sales as the  strong yen is biting into their profits overseas and auto demand is slumping at home after the expiration in September of government subsidies, while they seek to offset weakness in the domestic market with burgeoning demand in emerging markets.

The latest deal will help both companies offer more models without spending on developing and production, while  increasing their production volumes by supplying vehicles to their partners.

Nissan and Mitsubishi are also considering setting up a 50/50 joint venture to develop mini vehicles by the end of March 2013 for the Japanese market, where competition will likely be tougher after Toyota Motor Corp.  announced its entry into Japan’s mini car market this year.

The two are also studying production of the current generation of Nissan Navara pickup truck at Mitsubishi’s plant in Thailand, as Nissan’s production there is having trouble meeting increasing demand for its March compact. They are also discussing joint development of a new generation of one-ton pickup truck.

“It will support our strategy of expansion in emerging markets in Asia and the Middle East … help us strengthen our business in Japan,” Carlos Ghosn, Nissan President and Chief Executive, said at a press conference.

Nissan aims to boost its share in Japan to 15 percent by the end of March 2014 from the current 13 percent.

The CEO said that his company will continue to look to strengthen cooperation with Mitsubishi.

Mitsubishi Motors’ President Osamu Masuko agreed, saying it will seek “any cooperative project which might be beneficial to both of us.” Both said their possible future tie-ups may include operations in the small, low-cost car and electric vehicle businesses, though they said they want to focus on the latest deals first.

Mitsubishi aims to meet a global sales target of 1.5 million vehicles as early as possible, 56 percent more than the 960,000 it sold worldwide in the last fiscal year ended March.

The  two companies also are bolstering their existing alliances.

Nissan and its French peer Renault SA  in April formed a new alliance with Germany’s Daimler AG  to develop small cars, share engines and cooperate in small commercial vans. Mitsubishi Motors formed a broader partnership with PSA Peugeot Citroen SA in September to include development of electric vehicles on top of their production in Russia and vehicle supplies to PSA Peugeot.

Their strategies are part of a series of operations by global carmakers  to cut costs as price competition is intensifying in emerging markets, while investments to develop advanced vehicles remain hefty.

Volkswagen AG and Suzuki Motor Corp. forged a partnership last year to take advantage of their partners’ advanced technologies.

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