Nissan Motor Company is launching a bid to buy a one-third stake in Mitsubishi Motors Corp for US$1.8 billion.
Talks are reportedly at an advanced stage, with a 200 billion yen deal on the table.
Nissan would take a 30 per cent interest in Mitsubishi, making it the largest single shareholder.
A fuel-economy data scandal which broke last month has battered Mitsubishi’s market value, with it falling around 42 per cent ($3bn), with sales of its mini-vehicles dropping by half.
Mitsubishi overstated fuel economy on four of its mini-vehicle models: the Dayz, Dayz Roox (which are marketed as Nissan) and the Mitsubishi eK Wagon and eK Space.