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Last Updated: Monday, 6 December 2004, 19:27 GMT
Nissan eyes troubled Mitsubishi
By Jorn Madslien
BBC News business reporter

Nissan chief executive Carlos Ghosn
Fortunately for Mitsubishi, Mr Ghosn is the sort of man who enjoys hard work
The Japanese car makers Nissan and Mitsubishi are considering an alliance.

The talks come just months after the US-German car maker DaimlerChrysler pulled the plug on its partnership with Mitsubishi Motors.

The car makers would jointly develop small cars. "We should have a decision on any conclusion in the minivehicle discussions soon," a Nissan official said.

A deal could be the first step towards the creation of a new automotive giant with a global fist.

Beauty and the beast

For Nissan chief Carlos Ghosn, helping with the rescue of Mitsubishi would bring fresh challenges en masse.

Nissan factory in Tochigi, Japan
Nissan and Mitsubishi, two of the world's most famous car companies, have both stared into the economic abyss in the last five years. But while one has recovered to become Japan's most profitable automaker, the other remains in deep trouble
BBC News reporter Sarah Buckley

Fortunately for Mitsubishi, Mr Ghosn is the sort of man who enjoys hard work.

Famously, he has turned around ailing Nissan, helping it bounce back from the edge of bankruptcy and turn a $22bn (11bn) black hole into an enormous smile stretching from Wall Street to Tokyo.

Mitsubishi on the other hand has been adrift since April this year when DaimlerChrysler refused to provide a much anticipated $6.4bn cash injection, on top of its 37% stake, to bail out the debt-ridden car maker.

Mitsubishi is losing money head over heel. Last month, it reported that losses for the three months to September widened to 91.5bn yen, compared with a 29bn yen ($890m; 460m) shortfall a year earlier.

There is little doubt that the talks between the two car makers hinge on high hopes that some of the magic employed by Mr Ghosn at Nissan will rub off on its Japanese cousin.

Cash and capacity

The two car makers' venture could take the form of a new, jointly owned company that would produce minicars, the website just-auto.com reported.

One way forward would be for Mitsubishi to provide a factory, thus enabling it to use spare capacity, while Nissan provides cash.

For Nissan, this could prove an easy way of entering the minicar market and thus help it fuel its sales to more than 800,000 cars for the three-year period to April 2005.

Reuters reports that although, in formal terms at least, the current talks are limited to minicars, a Mitsubishi spokesman said that discussions are also being held on other topics.

A deal with Nissan could enable Mitsubishi to provide new models without incurring the enormous costs involved in developing them.

For example, Nissan could provide Mitsubishi with luxury cars, though such developments remain highly speculative. The Nissan spokesman insists "the talks only involve minicars".

Fresh powers

Either way, a deal with Mitsubishi would further firm up Mr Ghosn's role as one of the world's foremost car industry executives.

In other words, it seems likely that 2005 is going to be quite a year for the tough businessman.

Any cooperation with Mitsubishi would come in addition to Nissan's partnership with the French car maker Renault where Mr Ghosn is due to step in as chief executive, replacing retiring Louis Schweitzer who will stay on as chairman.

But although links with Mitsubishi could make Mr Ghosn an even bigger figure than he already is, there is also the risk that the car maker's troubles could pull him down.

So there is every reason to think that he is treading carefully before getting too involved in Mitsubishi's troubled operations.


SEE ALSO:
Steel shortage hits Nissan plants
25 Nov 04 |  Business
Mitsubishi gets pledge of support
03 Dec 04 |  Business
US car sales boost for Japanese
04 Nov 04 |  Business
Mitsubishi crashes into the red
08 Nov 04 |  Business
DaimlerChrysler dumps Mitsubishi
23 Apr 04 |  Business


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