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Nissan and Mitsubishi Motors are to expand their arrangement to supply each other with small cars and vans under a deal announced today.

The pair currently have OEM agreements in Japan, where Mitsubishi supplies Nissan with mini-cars and small light commercial vehicles while Nissan supplies light commercial vehicles to Mitsubishi.

The expanded agreement will add two new areas of co-operation:

• In Japan, Mitsubishi will supply its Pajero Mini SUV to Nissan starting from autumn 2008 on an OEM basis.

• In Japan and other markets, the two companies will explore collaboration on the development, production and OEM supply of small light commercial vehicles for Japan and overseas markets.

Nissan has OEM product exchanges with many automakers in several markets. The announcement says that Mitsubishi aims to improve its productivity and management efficiencies by growing its OEM business.