Nissan Motor Co. and Mitsubishi Motors Corp. said Monday they are mulling a business alliance, and media reports said the broad-based tie-up would include jointly developing and producing minicars and compact cars.
 
However, the companies said nothing concrete has been decided.

The Nihon Keizai Shimbun reported that under the plan, Nissan will also supply luxury vehicles to Mitsubishi in Japan and other markets on an original equipment manufacturing basis, in order to help the struggling carmaker make up for the lack of new products.

Under the plan, the two firms will also create a new company by the end of 2005 for joint production of minicars, the report said.

The new firm's capitalization and investment ratio have yet to be decided, but Mitsubishi is expected to provide its production facility at the Mizushima plant, Okayama Prefecture, as an investment in kind, the Nikkei report said.

The tie-up with Nissan would enable Mitsubishi to raise capacity utilization rates at the factory and save on new car development costs, the report said.

Nissan, meanwhile, hopes the alliance will allow it to make a full-scale entry into the minivehicle market, a segment it regards as crucial to achieve the goal of raising global sales by 800,000 units during the three years starting in April 2005, the report added.

A report on Reuters indicated that current discussions may be confined to minivehicles: "We should have a decision on any conclusion in the minivehicle discussions soon, but the talks only involve minicars," a Nissan official told Reuters, adding that an announcement should come in the next few weeks.

A spokesman at Mitsubishi Motors said MMC was in talks with Nissan on a broad range of topics but no decisions had been made, Reuters reported.