Mitsubishi shares up as Nissan awards it a new small car construction contract
Under the new agreement, Mitsubishi will utilize its spare capacity in its undersubscribed factories to construct 36,000 passenger mini-cars per year for Nissan, which will carry the Nissan badge. Mini-cars are vehicles with engines with a capacity of less than 0.66-liters and are very popular in Japan. Assembly is due to start in the first half of fiscal 2005. The new deal adds on to a previous and similar production arrangement for Mitsubishi to supply 20,000 small cars to Nissan. Mitsubishi has been looking for auto collaborations to support its struggling business and to make meaningful use of spare capacity in its production facilities, which has been brought about by poor sales of its own branded vehicles due to lack of customer confidence. The deal could prove to be vital to Mitsubishi's efforts to avoid bankruptcy by persuading shareholders and other potential investors to support a recovery plan due to be revealed at the end of January.