Mitsubishi Motors has now disclosed that more models have been affected by its fuel-economy scandal than those which have been previously announced.
After anonymous sources leaking out the news that Nissan Motor was considering taking up a controlling stake in its scandal hit smaller rival Mitsubishi Motors, the company has now confirmed its potential investment.
The two auto manufacturing giants already cooperate in the field development and manufacturing with a partnership dating back to 2011, which however does not cover cross shareholding.
Of late, Mitsubishi Motors has got badly hit in a series of major car scandals which include its admissions that it overstated its vehicles fuel economy in at least four of its models, including two sold under Nissan’s brand. The admission has wiped out $3 billion of its market capitalisating and has dented its market share.
“Nissan and Mitsubishi are discussing various matters including capital cooperation, but nothing has been decided,” said both manufacturers in separate statements. Their respective boards have met yesterday to discuss the matter. Nissan is also set to announce its full year earning this week.
As per two sources who are familiar with the matter at hand, both manufacturer are in advanced negotiations over a deal which could see Nissan investing $1.8 billion and take a one third stake in Mitsubishi, which could provide it controlling stake under Japanese shareholding rules.
If the 200 billion yen deal were to go through, it would see Nissan emerge as the single largest shareholder of Mitsubishi Motors.
Mitsubishi has separately confirmed the on-going discussions and has stated it has enough cash to weather the fuel-economy scandal. It has stated that non-compliant data may have been used to calculate the fuel economy for more of its models which have been previously disclosed.
With Mitsubishi’s admission of overstating the fuel economy of its vehicles last month, analysts estimate that it could be facing upto $1 billion in compensation costs to its customers along with payments to Nissan, since two of the models have been sold under the Nissan badge.
The production of the models that have been announced have been stopped last month. However, its current admission has stated that more models have also been affected by the fuel economy scandal.
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