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Nissan Motor Co. and Mitsubishi Motors Corp. are discussing a deal in which Nissan would supply luxury cars for sale under the Mitsubishi brand, according to sources close to the matter.

Struggling MMC has already agreed to more than double its supply of minivehicles to Nissan for sale under the Nissan brand.

The companies are holding talks on the specifics of the envisioned supply contract for such models as the President and Cima, including prices, supply period and the number to be supplied, they said.

MMC, reeling in the wake of a spate of defect coverups and recalls, is hoping to recover sales on the strength of the envisioned arrangement with Nissan, which has a lineup of luxury car models with strong brand recognition among consumers, they said.

If the deal is finalized, MMC will either scale back or halt output of its own luxury models, including the Dignity model, according to the sources.

The two automakers are also exploring the possibility of setting up a joint venture to push development and production of minivehicles, they added.

The minivehicle deal calls on MMC to supply 36,000 minicars of the eK series a year, starting in the April-September first half of fiscal 2005, in addition to the Minicab commercial vehicles it currently supplies to Nissan.

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