(CBN - Global) May 18 -- The Chinese joint ventures of Mitsubishi Motors Corp. and Nissan Motor Co. may be required by the local authorities to consolidate if Nissan takes a de facto controlling stake in its smaller, scandal-hit rival.
The two Japanese automakers formed a strategic alliance on May 12 that sees Nissan take a 34 percent stake in Mitsubishi for USD2.2 billion. If all goes well, the acquisition will be completed in the first half of next year.
In accordance with China's auto industry policy, foreign carmakers are allowed to have two joint ventures in the country at most. Mitsubishi has two, namely GAC Mitsubishi Motors Co. and Southeast (Fujian) Motor Corp., and the Renault-Nissan alliance also has two.
"GAC Group is very concerned about the development of GAC Mitsubishi Motors, and it remains to be seen as to where the joint venture is headed," said an insider at GAC Group.
Consolidation takes time, but the market may not grant too much time for re-combinations. Against the backdrop of integration with Nissan, and constrained by the Chinese policy, the Mitsubishi brand may find it difficult to develop independently in China, giving rise to conflicts with its commitment to staying independent.