Financially Struggling Mitsubishi Motors to Supply Minicars to Nissan Motor

TOKYO January 17, 2005; The AP reported that Mitsubishi Motors Corp., which has been seeking partnerships to bail itself out of its deep financial woes, will supply minicars to Nissan Motor Co., both sides said Monday.

Tokyo-based Mitsubishi Motors will supply 36,000 minicars a year to Nissan starting in the first half of fiscal 2005, which begins April 1.

Both Nissan and Mitsubishi had said they were talking about a possible tie-up, and the agreement was not a major surprise. Nissan, which does not make its own minicars, now gets minicars from Suzuki Motor Corp.

Minicars are too tiny for many parts of the world, but they are extremely popular in Japan as a cheap way of getting around crowded streets.

Mitsubishi Motors' sales have plunged in both Japan and the United States over an auto defect cover-up that surfaced last year and recalled thousands of vehicles.

The scandal has damaged the automaker's reputation because it came after it had acknowledged in 2000 a systematic cover-up of defects spanning decades and had promised to come clean.

Mitsubishi Motors has previously been supplying Nissan with 20,000 commercial minicars, and Monday's deal covers passenger minicars.

Nissan, which has an alliance with Renault SA of France, will be able to increase its minicar lineup while Mitsubishi Motors will be able to produce minicars more efficiently by increasing production volume, both sides said in a statement.