TOKYO - Nissan threw a lifeline to Mitsubishi Motors Thursday as it announced plans to buy a one-third stake in the scandal-hit automaker for $2.2 billion (S$3 billion), forging an alliance that will challenge some of the world's biggest auto groups.
The news comes after Mitsubishi was plunged into crisis following bombshell revelations that it has been cheating on fuel-economy tests for years - sparking questions about the company's future.
Under the deal, Nissan will become the struggling firm's top shareholder, vaulting past Mitsubishi Heavy Industries, which owns about 20 percent of the Outlander sport utility vehicle maker.
Nissan and French automaker Renault own share stakes in each other and their sales lumped together with those of the smaller Mitsubishi would top 9.5 million units annually - although they will operate as independent firms.
That is not far behind the 10.15 million sold last year by Toyota, the world's top automaker, and 9.9 million shifted by German giant Volkswagen.
Chevrolet and Cadillac maker General Motors moved 9.8 million vehicles globally in 2015.
"This transaction represents a potential win-win for both of our companies and promises growth opportunities," Nissan CEO Carlos Ghosn told reporters.
"We are determined to preserve and nurture the (Mitsubishi) brand. We will help this company to address the challenges it faces, particularly in restoring consumer trust." However, both firms - which have longstanding business links - would remain independent of each other, Ghosn added.
"There is no confusion. Nissan is Nissan. Mitsubishi is Mitsubishi," he said.
"Mitsubishi is responsible for its own market, for its own strategy. We are shareholders." In response to news of the deal, Mitsubishi shares skyrocketed more than 16 percent to 575 yen in Tokyo. The stock had plunged about 40 percent since the scandal broke last month.
The deal announced Thursday will see Nissan buy about 506 million Mitsubishi shares at 468.52 yen apiece, valuing the purchase at 237.36 billion yen ($2.2 billion), according to a regulatory filing.
Nissan will also be allowed to appoint some members to Mitsubishi's board.
The under-fire automaker has admitted unnamed employees manipulated data to make cars seem more fuel-efficient than they were.
The scandal - reported to cover almost every model sold in Japan since 1991 - also includes mini-cars produced by Mitsubishi for Nissan as part of a joint venture.
It was Nissan that first uncovered the problems with Mitsubishi's fuel economy data, but Mitsubishi has said Nissan had no part in the cheating.
The company has suggested employees fudged the tests because they felt under pressure to meet ambitious fuel-economy targets. Some cars appeared to be about 15 percent more fuel-efficient than they were in reality.
The new tie-up gives Nissan access to Mitsubishi's strong foothold in Southeast Asia and some key technology, including hybrids and minicars, which are hugely popular in Japan.
The move would also help drive Ghosn's bid to run one of the world's top three auto groups.
"My initial impression is that Mr Ghosn is trying to reach the pinnacle of his career," said Seiji Sugiura, auto analyst at Tokai Tokyo Research Institute.
"Nissan has been less than perfect in emerging markets (such as Thailand, Indonesia, India) but Mitsubishi's brand there is very strong." Mitsubishi sold about one million vehicles globally last year, making it one of the smallest among Japan's eight major automakers, also including Honda, Suzuki and Mazda.
It is unclear what sort of financial hit Mitsubishi will take over the scandal as it faces possible huge fines, lawsuits and compensation costs.
On Wednesday it said the cheating did not affect cars sold overseas, potentially limiting the scope of the problem.
Mitsubishi was pulled from the brink of bankruptcy a decade ago after it was discovered that it covered up vehicle defects that caused fatal accidents. The Mitsubishi group of companies stepped in with a series of bailouts to save the firm.