Reports today of an anticipated tie-up between Japan's second-largest car maker Nissan and the recently scandalised Mitsubishi were confirmed at a joint conference this afternoon.
As reported by Japanese broadcaster NHK early this morning, Nissan will invest 237 billion yen ($2.9 billion) to take a 34 per cent stake in Mitsubishi Motors.
The size of the purchase represents a controlling share in the Mitsubishi Motors business, with Japanese law giving veto powers over board decisions to shareholders with a one-third stake in a company.
The arrangement will lead to cooperation in parts purchasing, the development of common vehicle platforms, technology sharing and joint plant utilisation. The two, likely also with Renault, will also work together to build stronger positions in growth markets.
Neither company has revealed specific plans for future product, although the deal puts Mitsubishi in position to launch a long-overdue replacement for the Lancer small car.
Above: Mitsubishi has previously said it won't replace the Lancer, but now..?
Mitsubishi already has a new range of SUV models in advanced development, but the company's new relationship with Nissan will undoubtedly open doors to better parts supply and a broader manufacturing platform.
Both companies have also made significant investments in electric vehicle technology, while Mitsubishi has in recent times focussed heavily on plug-in hybrid drivetrains.
Perhaps most importantly of all, the new arrangement - and relevant new models - is sure to see Mitsubishi's ailing share of the giant US market revitalised.
Nissan will be the car maker's largest single shareholder, ahead of the 12.63 per cent owned by Mitsubishi Heavy Industries. Mitsubishi Corporation owns 10.06 per cent, with all others holding single-digit shares.
For Mitsubishi, the deal builds on an existing partnership that has seen the two brands share models in certain overseas markets for the past five years, while for Nissan it adds to a portfolio of car maker alliances that includes Renault (which owns a 43.4 per cent stake in Nissan), Mercedes-Benz parent Daimler, and a joint stake with Renault in the Russian manufacturer AvtoVAZ.
Above: Nissan's coming new Micra could form the basis of the next Mirage
As for Mitsubishi's current fuel-cheating scandal in Japan, the deal will see Nissan contribute corporate governance and management expertise to help restore public trust in the three-diamond brand.
“It represents a win-win,” Renault-Nissan CEO, Carlos Ghosn, said today. “We believe in the potential of Mitsubishi Motors.”
Speaking with press in Japan, Ghosn added: "We believe we can help and support and grow together, better than if Mitsubishi was doing this on its own".
Mitsubishi Motors CEO, Osamu Masuko, said his company "had to do something quite daring. It is not an easy task to restore trust".
The announcement may come as a surprise in some corners of the industry, with Mitsubishi's fuel scandal affecting not only its own image but also Nissan's, thanks to a number of the affected Mitsubishi vehicles having also been manufactured for and rebadged as Nissan cars in the Japanese market.
While the two could have split in acrimony, the bond between both has instead been tightened.
The agreement is expected to be finalised before the end of May.