Mitsubishi Motors’ shares up on reports it will join Honda-Nissan partnership

Shares in Mitsubishi Motors (7211.T) surged on Monday following media reports that the Japanese automaker is in talks to join Nissan’s (7201.T) and Honda’s (7267.T) planned strategic partnership.

Nissan and Honda said in March they were looking at collaborating on electric vehicle components and artificial intelligence in automotive software platforms, though they are not planning a capital tie-up.

Representatives for the three automakers declined to comment. Shares in Mitsubishi Motors climbed 6.3 per cent in early afternoon trade. Nissan’s stock rose 2.8 per cent and Honda’s gained 2.6 per cent.

The planned partnership underscores the increasing pressure on automakers to work together to cut down on the massive costs involved in developing new technology as well as the two camps that the Japanese auto industry is dividing itself into.

In the other camp, Toyota Motor (7203.T) works with its partners: Suzuki (7269.T), Subaru (7270.T) and Mazda (7261.T).

Mitsubishi Motors is 34 per cent owned by Nissan and part of a long-standing alliance with Nissan and Renault (RENA.PA).

Its participation in the planned partnership with Honda would be a natural progression given Nissan’s stake in the company, analysts at Goldman Sachs wrote in a note to clients.

“We believe the most important area in this reported tie-up is software,” they wrote, adding that all three companies could benefit from pursuing economies of scale.

Nissan, Renault and Mitsubishi Motors last year agreed to restructure their alliance, aiming for a downsized but more pragmatic and agile partnership.

As part of that, Nissan and Mitsubishi Motors will invest as much as 600 million euros ($651 million) and 200 million euros respectively in Renault’s electric vehicle business Ampere.

($1 = 0.9209 euros)