Nissan to buy major stake in Mitsubishi: report

NISSAN Motor Company is reportedly in talks to buy a 34 per cent stake in Mitsubishi Motors, which would make it the majority shareholder of the embattled car-maker.

Japanese broadcaster NHK has reported that it was informed by sources that the pair are in final negotiations of a deal that is worth ¥200 billion ($A2.5b) which would give Nissan a larger share than Mitsubishi Heavy Industries' 20 per cent stake. Two other companies within the giant Mitsubishi Group hold the remaining shares.

Nissan and Mitsubishi are reportedly scheduled to hold board meetings today in Japan to make a formal decision on the proposed buy-out of shares.

Late last month Mitsubishi admitted to manipulating the fuel economy test results for 625,000 Japanese-market 'kei' cars, with the company confirming that the testing method differed from the one required under Japanese law.

The cars were built by Mitsubishi as part of a 50/50 joint-venture between Mitsubishi and Nissan, effecting 468,000 Nissan Dayz and Dayz Roox models built between June 2013 and March 2016, as well as 157,000 Mitsubishi eK Wagon and eK Space models.

Mitsubishi has since announced that the fuel data manipulation has been going on for 25 years and that it was investigating whether other Japanese-market models were impacted by the deception.

Both Nissan and Mitsubishi have pulled the affected models from sale while the issue is being investigated by an independent committee.

The joint-venture was set up about five years ago and the two car-makers were in the process of developing the next-generation versions of their tiny kei cars.

Mitsubishi has experienced a downturn of Japanese domestic-market sales since it announced it had manipulated the fuel data. About 60 per cent of the company's sales in its home market are for mini cars such as the eK Wagon.

NHK says one of the key reasons the car-maker agreed to the arrangement with Nissan was to boost its research and development capabilities.

Nikkei has reported that the tie-in would appeal to Nissan as its market share in Asia is well off the pace of big hitters such as Toyota and Honda, while Mitsubishi generated more than 50 per cent of its operating profit from Asia, thanks to the popularity of its SUVs and light-commercial vehicles.

Back in 2013, Mitsubishi announced that it would refocus its research and development efforts on developing SUVs and LCVs and outsource its passenger car development and manufacturing to another partner.

The company was previously in lengthy talks with the Renault-Nissan Alliance to share the development of the next-generation Lancer small car with the new Renault Megane underpinnings, but a deal was never reached, leaving Mitsubishi without a partner.

Since then, Mitsubishi's North American arm has announced that it would stop selling the Lancer at the end of next year, placing doubt on the future of the nine-year old small car.