Japanese car makers Mitsubishi Motors and Nissan have confirmed talks of a capital tie-up as the former struggles with a scandal over falsifying fuel efficiency.

Trading in Mitsubishi Motors’ shares was suspended on Thursday.

Local media reports suggest Nissan will take a one-third stake in its rival to become the single largest shareholder.

In the wake of the scandal, Mitsubishi Motors had seen its market value drop by more than 40%.

In April, the carmaker admitted it had used fuel consumption tests that broke Japanese rules for the past 25 years.

‘Nothing decided’

The rigged testing meant that the cars were advertised as being more fuel-efficient than they actually were.

The inaccurate tests were in fact flagged up by Nissan’s in-house testing on several models produced by Mitsubishi for its fellow Japanese carmaker.

“Nissan and Mitsubishi are discussing various matters including capital co-operation, but nothing has been decided,” the two companies explained in separate statements on Thursday.

They said their boards of directors were to meet in separate talks on Thursday to discuss the matter.