Mitsubishi Motors Corp. said Saturday it is considering setting up a joint venture with Merrill Lynch & Co. to engage in North American financing operations as part of the struggling automaker's rehabilitation efforts.
The joint venture, aimed at offering sales financing and servicing as well as raising funds, would provide competitive sales financing products to customers and dealers as part of an ongoing review of its U.S. finance business, the automaker said.
In a related move, Mitsubishi Motors said it will sell some assets of its U.S. auto loan subsidiary to Merrill Lynch in an effort to improve the automaker's financial standing by reducing assets and interest-bearing debts.
Specifically, about $2 billion of Mitsubishi Motors Credit of America Inc.'s $4 billion in assets, such as lease and loan receivables, will be sold to Merrill Lynch sequentially starting this week after the completion of procedures with related financial institutions, it said.
Mitsubishi Motors struck a basic accord with Merrill Lynch in September to study the possible sale of its existing assets and the structure for its new financial services business in the United States.
Mitsubishi Motors' auto loan business in the U.S. market was one of the factors behind its management deterioration. Because of its special loans, for which payments start after a certain period of time, the automaker suffered large amounts of irrecoverable loans, resulting in some 90 billion yen in losses.
The tieup with the major U.S. securities company would be part of Mitsubishi Motors' overhaul of its North American business under its new business turnaround plan, along with a possible alliance with major French automaker Peugeot Citroen.
MMC has been struggling to improve earnings amid a series of scandals related to defect coverups and is conducting a review of its business revitalization plan.