IT could all have been so very different. If DaimlerChrysler had followed its instincts, the company would have taken a controlling stake in Nissan instead of Mitsubishi.

But the German bean counters took a long look at Nissan's accounts, covered as they were in red ink, and walked away. Investing in Nissan, they said, was too risky.

Instead, it was left to Renault to take a controlling stake, and the French have not looked back.

DaimlerChrysler took what seemed to be the safer option when it bought into Mitsubishi - Japan's number four motor manufacturer behind Toyota, Honda and Nissan.

But while Renault's stake in Nissan is now worth more than Renault itself, DaimlerChrysler is being asked to plough money into its Japanese partner as part of a desperately-needed restructuring plan.

With a 37 per cent stake, DaimlerChrysler holds the largest stake in what was originally the automobile division of the labyrinthine Mitsubishi keiretsu (a Japanese conglomerate organised around a bank).

Despite the Mitsubishi organisation's overall industrial might - it makes everything from videos to rockets - the car company has always lagged behind its domestic rivals, at home and in the international market.

Things have not got any easier. Mitsubishi expects to post losses of 72bn yen in the year to March 31, mainly due to collapsing North American sales.

When DaimlerChrysler paid $2bn for its Mitsubishi stake in 2000, the Japanese carmaker looked a safe bet, instantly bolstering the group's reach in Asia and providing much-needed small car development expertise.

But things went pear-shaped very quickly, fuelled by disastrous US buying incentives - thousands of owners defaulted on their payments - and a subsequent fall in overall sales, which were down 25 per cent in North America last year. Things got worse when it had to recall 2.5 million vehicles to correct a mechanical problem and probably reached a nadir when police raided the headquarters of Mitsubishi Motors Corp last October as part of an investigation into an accident in which a tyre came off a truck and crushed a pedestrian. Shiho Okamoto died and her two sons were injured when a tyre from a Mitsubishi truck hit them as they walked along a pavement in the city of Yokohama, west of Tokyo.

Investigators found that the hub that links the axle to the tyre was broken.

Mitsubishi said faulty checkups led to the accident and could have been avoided.

Soon after the accident in 2002, Mitsubishi Motors began offering free inspections of the trucks, affecting about 80,000 vehicles. Mitsubishi Fuso said in a statement it had changed the parts on more than 73,000 vehicles.

Mitsubishi refinanced a portion of the company's short-term debt last year.

Analysts estimate it has about $1.6bn in cash, but needs to raise closer to $2bn to service a $10.5bn debt and cover new product development.

It hopes to do this by asking institutional investors to join DaimlerChrysler and Mitsubishi in buying newly issued shares. The sale of preference shares could realise between $2.9bn and $3.8bn.

In January, DaimlerChrysler invested another $490m by taking a 22 per cent stake in affiliate Mitsubishi Fuso Truck and Bus Corporation. Chief executive Rolf Eckrodt said money from the sale would give the company "extra traction" to invest in model development. The money is needed desperately. According to industry figures, Mitsubishi spends about three per cent of sales on research and development, less than half as much as mighty Toyota, Japan's biggest motor manufacturer.

In Europe, more cars are on the way after a period of inactivity.

The first to arrive is the Outlander, a crossover bridging the gap between saloon cars and off-roaders, similar to the successful Subaru Forester.

The Outlander is closely related to the Airtrek, a Japanese model aimed at Asian markets but hastily revised when it became obvious the car would appeal to European buyers.

As well as a change of name to Outlander, the exterior design was also thoroughly revised at the Mitsubishi Design America studio, in California.

When it went on sale in January, the Outlander became the first new model to be launched in Europe for three years - it will not be the last.

The real question is whether new designs can arrest the decline, particularly in the US.

All will be revealed later this month when Mitsubishi Motors unveils its turnaround blueprint on Friday.

DaimlerChrysler will be hoping its turnaround can be as smooth as the Nissan revival plan.