After struggling through years of lackluster sales and countless setbacks, Mitsubishi Motors Corporation (MMC) just announced that Nissan has plunked down 237 billion yen (or $2.28 billion at current exchange rates, 10/20/16) to purchase 34 percent of its stock, handing Nissan a controlling stake in MMC. The deal will allow both companies to synergize across multiple departments and significantly reduce annual costs, while also promoting the sharing of vehicle platforms and new technology.
The deal is also expected to bring Mitsubishi some much-needed resources as it scrambles to address revelations that the automaker cheated on fuel economy data.
The acquisition was first announced back in May, following Mitsubishi’s fuel economy scandal story that broke in April. The deal was finalized only recently.
Taking the position of chairman-elect is Carlos Ghosn, the current CEO at Renault and Nissan, a role that should suit him well considering his experience with the Renault-Nissan Alliance.
Mitsubishi’s CEO and President, Osamu Masuko, will stay on board at his current position, despite some calling for his resignation in the wake of Mitsubishi’s mileage scandal.
“As part of our Board and management team, Nissan will help us rebuild customer trust in our company and maximize potential future synergies through our deeper alliance,” Masuko said in a press release.
Ghosn justified Masuko staying on in a joint briefing, stating, “This sends a strong message that it’s not Nissan that’s going to transform Mitsubishi, it’s Mitsubishi that’s going to transform Mitsubishi.”
Mitsubishi’s press release on the deal states, “Nissan and MMC will begin cooperating on a wide-ranging synergy program, building on a five-year alliance in minicars between the two companies.”
Synergies identified include purchasing cost-reduction, joint plant utilization, shared vehicle platforms, and technology sharing, which should encompass both autonomous driving and hybrid powertrains.
Joint cost reductions are estimated to save Mitsubishi around 25 billion yen annually, with Nissan saving roughly 24 billion yen in 2017.
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