By on May 13, 2016

2016 Nissan Titan XD PRO-4X Grille, Image: © 2015 Mark Stevenson/The Truth About Cars

Yesterday’s news that Nissan will buy a 34-percent controlling stake in Mitsubishi for $2.2 billion was the latest win for Carlos Ghosn, the man behind the Renault-Nissan Alliance of 1999 and possessor of many fingers in many pies.

Ghosn, CEO of both Nissan and Renault, inked the agreement with Mitsubishi as the other automaker battles a misleading gas-mileage scandal. At a price of 468.52 yen/share, Ghosn’s purchase of new shares was a smoking deal. Mitsubishi shares traded for 1,100 yen just last December.

What becomes of the two companies now? And how will Ghosn’s world-straddling empire benefit by snapping up beleaguered Mitsubishi?

Ghosn, ever the seeker of opportunities, clearly saw benefits in exercising control over Mitsubishi.

The deal came about, according to Bloomberg, after Mitsubishi Chairman Osamu Masuko visited Ghosn on April 18 to apologize for the gas mileage scandal, which also affected the Nissan minicars produced by Mitsubishi under a 2010 agreement.

Ghosn said he “would back us up as much as possible, so hang on,” said Masuko, adding that they had talked about an alliance before, but the scandal compelled Ghosn to pull the trigger.

Working together holds several benefits for both automakers.

The alliance provides a way for cash-strapped Mitsubishi to develop competitive products in the future. Right now, the automaker’s Outlander Sport and Outlander SUVs, as well as its Lancer sedan, ride atop the dated GS platform co-developed by Mitsubishi and DaimlerChrysler in the early 2000s.

Yes, that’s the platform used by the Jeep Compass and Patriot, the defunct Dodge Caliber and Chrysler Sebring, and — don’t forget — the Dodge Journey.

Ghosn talked about “synergies” and the financial benefits of shared platforms during the Mitsubishi alliance announcement, but that’s unlikely to happen over night. After all, years passed before the first common platform emerged from Renault-Nissan deal. The B platform saw the light of day in 2002, followed a year later by the C platform.

If Ghosn is happy with his own vehicles’ underpinnings and doesn’t want to invest in platform development right away, Mitsubishi could simply borrow existing Nissan architecture. For example, Mirage buyers aren’t likely to complain if a Micra chassis slides underneath their econobox.

2017 Mitsubishi Outlander PHEV

Besides architecture, Nissan’s engines and transmissions may be of interest to Mitsubishi. Regardless of the model, there are Nissan drivetrain components that could benefit the vehicle’s performance and better satisfy environmental regulators.

Nissan stands to gain in some key areas. Aligning with Mitsubishi means inroads into markets where Nissan is weak, including southeast Asia — Thailand, especially.

As shown by their previous partnership, Mitsubishi’s Kei-car platform, which underpins the minuscule vehicles wearing Nissan badges, is still a valuable asset for Nissan. Ghosn doesn’t want to waste money on a vehicle class that doesn’t make much money for an automaker, but is a necessity for gaining market share and entry-level buyers in Japan.

Mitsubishi’s compact pickup game is another bright light — its Triton model sells like gangbusters in overseas markets, outpacing the Nissan Navara. Earlier this decade, Nissan outsourced Navara production to to Mitsubishi, which produced it alongside the Triton at its Thailand assembly plant. Nissan has since built a factory to handle its own truck production in that country.

Mitsubishi already has a sales winner in the Outlander PHEV plug-in hybrid, which deserves some of the credit for the brand’s sales growth in Europe. The Outlander PHEV is the most popular plug-in in the UK — last year the PHEV and Nissan Leaf accounted for 57 percent of all plug-in vehicles in that country.

In the realm of electrification, Mitsubishi’s hybrid technology could bolster Nissan. Unlike rivals Honda and Toyota, neither automaker is enthusiastic about pursuing hydrogen fuel cell technology. Both view hybrids and electrics as vehicles of the future.

Both companies plan to make the agreement official on May 25, after which Nissan will install a new chairman for Mitsubishi’s board of directors, and add four of its own directors to the table. With its controlling stake, Nissan will be able to veto many management decision it doesn’t like, and more or less guide its partner in whatever direction it chooses.

Still, Ghosn faces a number of risks. For starters, there’s possible opposition from the powerful business enterprises that remain at the board table, a collection Bloomberg calls “a tough nut to crack.”

Nissan and Mitsubishi sales are down in Japan, and the latter company faces steep fines for its mileage cheating, as well as a serious hit to its reputation. This will take time to recover from.

With the scandal still fresh, Mitsubishi could see its share values drop even further, making Nissan’s smoking deal a bitter memory.

Still, the Mitsubishi buy only erased 237.4 billion yen from Nissan’s 1.4 trillion yen pile of available cash. For now, there’s decent shelter from any storm.

[Image: © 2015 Mark Stevenson/The Truth About Cars, Mitsubishi Motors]

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25 Comments on “Ghosn on the March: What Does an Alliance Mean for Nissan and Mitsubishi?...”

  • avatar

    The Outlander is probably the most acceptable surviving GS platform vehicle still in production. It is probably the best GS platform vehicle offered.

  • avatar

    I imagine that in the US, Nissan will put Mitsubishi out of it’s misery. There are many countries in which Mitsubishi has the product, dealer network, and market share to make sense; the US is not one of those countries, and there’s really no point in Nissan investing the cash necessary to make Mitsu a viable brand in the US again.

    • 0 avatar

      I agree, plus why compete with themselves? Begin the Mitsubishi Death Watch!

      • 0 avatar

        Yes, take Mitsubishi out back and blast it, Old Yeller-style.

        I’ll miss their 72 months at zero percent interest ads. But, we’ll still have Mitsubishis huffing blue smoke, for a while.

    • 0 avatar

      On the other hand, Renault has been looking to get back into North America and the Mitsubishi showrooms do want something to sell.

      • 0 avatar

        What Mitsubishi showrooms? :) Besides, if Carlos is going to take Mitsu out of the US to keep it from competing with Nissan, why is he going to bring Renault in?

        I think we’re more likely to see PSA move in, but not quickly

    • 0 avatar

      Closing a brand could be more expensive then spinning up cheap Nissan models to move additional volume under the Mitsubishi banner in USDM.

      • 0 avatar

        I agree, I expect to see some Renault-Samsung cars showing up at Mitsubishi dealers soon. Might be a good thing.

        Like them or not, we need bottom feeder cars, especially as mainstream brands move up, such as Hyundai-Kia. They shoud be decent transportation for the kinds of credit-challenged customers Mitsubishi is accustomed to. Lets just hope they dont get full of themselves by offering a decade old Nissan derivitive for Accord/Fusion money. Without large piles of cash on the hood and too-good-to-be-true interest rates, they will be glued to the showroom floor.

  • avatar

    I don’t think the Mitsubishi brand or at least its infrastructure will leave North America. Instead, I foresee an entire lineup of Renault Samsung vehicles to be sold underneath it or Renault superseding Mitsubishi as a brand in North America.


  • avatar
    Jeff S

    Here is the answer to FCA’s production of compact and midsize cars and possibly midsize trucks. Why not outsource to Nissan/Mitsubishi. Also the Mitsubishi Triton and the Nissan Navara are much better than the Fiat Toro.

  • avatar
    Jeff S

    It would be good for Chrysler to outsource their cars to Nissan/Mitsubishi. Sergio has already stated that FCA will outsource the production of midsize and compact cars. A Triton would make a good midsize Ram and would go over much better in the USA than a Fiat Toro. Mitsubishi badged Chryslers were very popular in the 80’s and 90’s and Chrysler made a point of advertising them as Japanese Mitsubishi. I had an 85 Mitsubishi Mighty Max for 14 years with 200k miles and it was a good truck. My only complaint was it was hard to get parts for even at the Dodge dealers who sold the twin D-50. There were many parts that had to be ordered directly from Mitsubish and came from Japan even the catalytic converter which was not available from Midas or an auto parts store and which cost $600 in 1993. Even the fuel pump which was inside the gas tank had to ordered and took a few weeks to get from Japan ($200 in 1991). I did have better luck with a starter which was a rebuilt one for about $150. Nissan might help in that maybe parts would be shared with Mitsubishi and become more available and more reasonable in price. The Max had a 4 speed Borg Warner manual transmission which was the same as the Mazda and the Ford Ranger.

  • avatar

    We couldn’t have a 2018 Plymouth Colt, but we might get a turbocharged Ram Tup… or a three-cylinder Ram Wether…

  • avatar

    Logically Renault will not enter the US market as the can sell the same cars under the Mitsubishi brand. I think first the decision for the combined company might be to create 1 range of cars out of the existing Renault, Mitsubishi and Samsung ranges, then badge the cars differently depending on market conditions. So in the UK I expect the Mitsubishi brand to disappear but for many models to become Renaults. The big upside for Renault is that it will be easier to make money on RHD cars given that Mitsubishi have to make RHD cars for their own domestic market. Renault actually withdrew half their UK models at one point because the cost of converting the cars to RHD was prohibitively expensive… So I think Renailt will get Europe, Mitsubishi will get Asia and the US. The rest will get carved up market by market.

  • avatar
    Jeff S

    What you wrote makes sense. Renault has more recognition in Europe and the Renault brand in the US has never caught on. The last attempt to crack the US market led to Renault acquiring AMC and that did not go that well. FCA would do well to work a joint venture with Nissan/Mitsubishi to produce vehicles for them. Nissan would do well to develop an new midsize truck with Mitsubishi to replace the Frontier.

    • 0 avatar

      Jeff S,
      They could have Mitsubishi, current RAM and Nissan developing a New Frontier, but that would be several years into the future.
      Now they can rely on Nissan doing another Gas version of a midsize Pickup based vaguely on the NP300

  • avatar

    “What Does an Alliance Mean for Nissan and Mitsubishi?”

    It means that Mitsubishi doesn’t receive the death penalty from the Japanese government.

  • avatar

    Ghosn is like a quiet, more secretive Sergio. Out your ally for fuel economy cheating at the perfect media moment (after they’ve been doing it for decades) and step in and buy them for a fraction – that’s a heck of a merger strategy. And there’s essentially nothing they can do about it.

    It’s a decent match. If the French and Russians would let him finish smashing all his brands together, it’d be a huge company.

  • avatar
    Jeff S

    Carlos is more astute at business than Sergio. Maybe Ghosn will wait for the next Government bailout of FCA and snap them up.

    • 0 avatar

      I’ve been thinking about that – I think that Fiat might just compete too much with the non-US parts of Renault-Nissan-AutoVAZ-Mitsubishi to really pull off right, but it might not be a bad match.

      Who retires though?

  • avatar
    Jeff S

    Sergio should be the one that retires but it could be Carlos. Carlos would be the better choice to head up a merged corporation.

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