Nissan and scandal-hit Mitsubishi in talks on partnership

AP News
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Posted: May 12, 2016 2:07 AM
Nissan and scandal-hit Mitsubishi in talks on partnership

TOKYO (AP) — Scandal-plagued Mitsubishi Motors Corp. may have a suitor, Nissan Motor Co., headed by auto-industry turnaround guru Carlos Ghosn.

The companies said Thursday Ghosn and Mitsubishi Chairman Osamu Masuko will appear in a joint news conference. They have been in talks on a possible partnership involving stake ownership, both sides said.

Japanese media reports said Nissan would take a 30 percent stake in Mitsubishi Motors. The reports did not cite sources, which is customary here.

Mitsubishi has been rocked by a scandal over cheating on mileage tests to inflate mileage for minicar models.

The Tokyo-based automaker, which makes the makes the Outlander sport-utility vehicle and the i-MiEV electric car, acknowledged last month that it had systematically falsified mileage data on its eK wagon and eK Space light passenger cars, which were produced for Nissan as the Nissan Dayz and Dayz Roox.

It is common for a manufacturer to sell a product made by another company under its own brand.

The latest scandal surfaced after Nissan did its own mileage tests and raised questions. Nissan does not have minicars in its lineup, and placing Mitsubishi under its group umbrella would be one solution.

But Nissan, which makes the March subcompact, Infinti luxury models and Leaf electric car, would face a major challenge in repairing Mitsubishi's tarnished reputation and winning back consumer trust.

In the early 2000s, Mitsubishi disclosed a shocking scandal involving cover-ups of defects such as failing brakes, faulty clutches and fuel tanks prone to falling off, dating back to the 1970s. That resulted in more than a million vehicles being recalled retroactively.

In the unfolding mileage scandal, Mitsubishi has said the rigging dates back 25 years, and may involve all its models, including discontinued ones.

Nissan has a major partnership with Renault SA of France, which sent in Ghosn in 1999 to engineer its revival from near bankruptcy.

Ghosn has imposed cost cuts that have been more efficient, if not brutal, than old-style Japanese management, which relies on cautious, harmonious decision-making by committee and vaguely defined responsibilities.

Mitsubishi had an unsuccessful partnership involving foreign management, with DaimlerChrysler AG in 2000 that failed to reverse Mitsubishi's debts and lagging sales.

The collaboration gradually unraveled, as the German automaker refused to keep sending rescue money, ending after about five years.

It is unclear where Ghosn would be able to repeat the formula that worked with Nissan at Mitsubishi.

Many critics were skeptical about the Nissan-Renault alliance. But it has proven one of the most successful auto partnerships ever.

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Follow Yuri Kageyama on Twitter at twitter.com/yurikageyama

Her work can be found at http://bigstory.ap.org/content/yuri-kageyama