By on May 12, 2016

Carlos Ghosn speaks -01. Picture courtesy Bertel Schmitt

Yesterday’s vague Japanese media reports proved right this morning, as Nissan Motor Co. announced it will purchase a 34 percent controlling stake in scandal-plagued Mitsubishi Motors.

Taking advantage of Mitsubishi’s reduced market value following the company’s admission of cheating on Japanese fuel economy tests, Nissan’s 237 billion yen ($2.2 billion) bulk buy of shares makes it the automaker’s largest shareholder.

It’s a big win for Nissan, which can take credit for exposing the gas mileage scandal less than a month ago.

The new alliance, expected to be made official on May 25, opens up a number of opportunities for Nissan, which entered into a small-scale partnership with Mitsubishi five years ago. That joint venture yielded Japanese “kei” cars, giving Nissan an inroad into the minicar market.

Now, Nissan can share technology between the two companies, develop joint vehicle platforms, share assembly plants, and tap into growth markets.

“We will be the largest shareholder of MMC, respecting their brand, their history and boosting their growth prospects,” said Nissan president and CEO Carlos Ghosn in a statement. “We will support MMC as they address their challenges and welcome them as the newest member of our enlarged Alliance family.”

Ghosn said his company stands to realize “billions of dollars in one time and continuing synergies,” through the deal.

Osamu Masuko, chairman and CEO of Mitsubishi, said the alliance would “create long-term value needed for our two companies to progress towards the future.”

Nissan, which already has a 17-year strategic partnership with Renault, will see its global footprint expand once again when the deal becomes official. The company holds shares in Daimler and AvtoVaz as well.

As part of the deal, a Nissan-appointed chairman will take control of Mitsubishi, with a number of Nissan executives added to its board of directors (in proportion to the company’s stake).

[Source: Bloomberg]

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54 Comments on “Nissan to Spend $2.2 Billion for Controlling Stake in Mitsubishi...”


  • avatar
    Chocolatedeath

    Well the BandB have said for years now that consolidation would happen with some of the OEM’s. Wish Hyundai would have just bought Saab and scrapped Genesis.

    • 0 avatar
      Pch101

      This is less of a consolidation than it is a bailout prompted by Mitsubishi’s fuel economy scandal.

      • 0 avatar
        quasimondo

        A scandal prompted by Nissan outing them. One would say this was played masterfully by Ghosn.

        • 0 avatar
          redliner

          BINGO!

          Nissan has known for a long time that Mitsu was fudging the numbers. Goshen was just waiting for the right time to play his cards and scoop up Mitsu stock for a song.

        • 0 avatar
          Pch101

          Mitsubishi isn’t exactly a great prize.

          • 0 avatar
            CoreyDL

            It’s like when you find a Band-Aid in your burrito. Yeah it was free, but still.

          • 0 avatar
            28-Cars-Later

            So if its a “bailout”, why was Nissan tapped instead of another auto mfg or industrial concern?

          • 0 avatar
            Pch101

            Nissan is already in a joint venture with Mitsubishi to build kei cars, plus there had been some aborted plans to build larger cars for the US market. The relationship is already in place.

            Mitsubishi is a pretty small fish in the scheme of things. It’s not even popular in Japan. It does have the advantage of having some strength in parts of southeast Asia such as Indonesia but that doesn’t amount to a lot of cars.

            I don’t know the inner workings of Japanese politics, but I wouldn’t be surprised if the Transport Ministry forced Mitsubishi into some kind of deal that would result in new management. Per Bloomberg:
            ____

            Mitsubishi’s investigation into the cheating has been insufficient, Takao Onoda, an official at Japan’s Transport Ministry, said on Wednesday. The automaker hasn’t provided a complete picture of its misconduct and hasn’t clearly explained whether there was any data manipulation in fuel testing of other models, he said.
            ____

            Meanwhile, Mitsubishi Motors has gone on record as saying that it doesn’t need the help of its sister companies, which suggests to me that the keiretsu well has run dry.

            The company can’t borrow the money, so it needs equity. There is no one who would be more inclined to provide equity than its joint venture partner. This sounds like a way to pacify the angry regulators while allowing Mitsubishi management to save face. (They weren’t fired, it’s just that the gaijin brought in their own people.)

          • 0 avatar

            True, But they do have some strength in developing nations (the Caribbean and South East Asia). The also do bring additional volume and the possibility for other costs savings. I think it’s really a combination of semi bailout and Nissan’s expansion plans.

        • 0 avatar
          ccode81

          I smell it fishy, well written scenario to use insider information to acquire other company cheaply. A company whose stock traded above JPY 800 before the news came out, bought out today for JPY 468.52 per share.

    • 0 avatar
      SCE to AUX

      Saab? You’re kidding.

      The Genesis sedan alone outsells Saab’s last year in the US by 6:1. Saab was terrible.

      • 0 avatar
        heavy handle

        Not their last full years under GM.

        Agreed that their sales were minimal after all the “Saab is dead” headlines. That tends to scare-off customers, especially if the next headline is that the world economy is collapsing.

        It’s all water under the bridge now. As my mechanic says “Saab’s problem was that they sold a $30k car for $30k. You’ll never make a dime that way.”

      • 0 avatar
        Chocolatedeath

        I am not talking about sales. I am talking about style and presence which Genesis lacks in some areas. The last 9 5 was a genuinely handsome car. The Genesis brand as a whole is just starting to look good.

        • 0 avatar
          Pch101

          “The last 9 5 was a genuinely handsome car.”

          It would seem that the marketplace didn’t agree with you.

          • 0 avatar
            CoreyDL

            The last 9-5 wasn’t sold for very long, as Saab was mid-bankruptcy when it came out. It didn’t sell well, but looks were not the reason – production figures were.

            It was also very unreliable because it was half-baked.

          • 0 avatar

            I saw a last gen 9-5 parked in front of motel with hourly rates yesterday, never seen a Saab there before usually half dead pickups and Kias and Hyundais from the 90’s.

  • avatar
    87 Morgan

    With new ownership and management, the question is does Nissan decide to focus the US market solely on Nissan and leave Mitsu to rest of the world?

    Or, do they try and save Mitsu here in the states? Seems like they could be in competition with one another for the sub prime/rental fleet space.

  • avatar
    DeadWeight

    Nissan + Mitsubishi + Suzuki + Tata = Best Mega Merger Ever

    • 0 avatar
      Tstag

      Interesting so why would Nissan/ Misubishi/ Renault want to be involved with both Suzuki and Tata? TATA is strong in India but could do with more credible cars. Suzuki are popular in India but are one of the smallest Japanese car maker. Key differentiator between the two is that Tata own JLR which might be a good stable mate for Infinity, though in reality JLR probably doesn’t need any partners as it makes strong profits anyway.

      A better merger for Tata would be VW. JLR gets access to the Audi/ Porsche parts bin. Tata gets access to VW, Skoda, Seat parts bin. VW gets 2 strengthening premium car brands, non VW Diesel engines, which are competitive and Tata which is strong in India. Oh and Tata trucks, which would be a cracking alliance for Mann/ Scania

      As far as I can see Tata/ VW would be an awesome alliance.

      • 0 avatar
        CoreyDL

        Oh yes, because what your Passat really needs is some Jaguar bits.

        x.x

        • 0 avatar
          Tstag

          Point is VW don’t need JLR tech. But JLR don’t need VAGs. But both are spending money on the same things.

          • 0 avatar
            CoreyDL

            VW is in no position to make such a move at this time anyway. And I doubt TATA would want anything to do with them, as they make lots of money on financial services, construction, etc.

          • 0 avatar
            RobertRyan

            Not really what VW wants, acquiring Navistar would be a different matter

      • 0 avatar
        jthorner

        Porsche-VW doesn’t have allies, they only have subjects. In fact, German companies have a bad track record when it comes to strategic alliances, partnerships or any other kind of power sharing arrangement. Remember Daimler-Chrysler?

  • avatar
    NoID

    I was expecting Sergio to jump all over this in light of our need for a partner for small cars and our existing partnership with them in South America.

    Nissan’s purchase doesn’t preclude FCA partnering with them, and might actually facilitate such working together as we know Nissan and Ram were going in together on the Titan pickup before that deal died. But I wonder if we missed an opportunity here.

  • avatar
    Michael Haz

    Good grief. Why??

  • avatar
    CoreyDL

    This will be bad if they start using Mitsubishi ideas in Nissan cars.

    It will be fine if they just rebadge Nissan vehicles as Mitsubishi and sell them in Taiwan and Mexico, and leave everything else the same. Perhaps phase Mitsu out in the US over the next five years.

    Overall, I have a very bad feeling about the future of Nissan with this purchase. Anybody who’s partnered with Mitsubishi has regretted it later.

    • 0 avatar

      Arguably most of the years mitsu were partnered with Chrysler they were pretty good at helping each other and it seemed like a very good partnership. Towards the end not so much.
      Many of the current Mitsubishi’s really aren’t much worse then current Nissans. Based on selling price I would take an outlander sport over a Rogue.

      • 0 avatar
        CoreyDL

        Which partnership cars were -actually- good, though? Not just good looking, actual good cars. DSM?

        The only Mitsubishi I ever desired was a Starion, or a Montero. Fortunately, neither of those had anything to do with Chrysler.

        • 0 avatar
          FreedMike

          Well, there was the Laser/Eclipse, but also those ’90s Eagle/Mitsu Lancers and Galants. DSM built them all. Even the last Galant wasn’t half-bad…until they made it for a zillion years.

          • 0 avatar
            CoreyDL

            Weren’t those all pretty junky, in terms of quality? I’ll give the early ’90s Galant a pass, I think that was a pretty good, reliable car. Just too expensive.

          • 0 avatar
            gtemnykh

            The 98-03 Galant looked awesome, like a budget Japanese take on an E39 Bimmer. Overseas, they actually had some of the handling/power to back that up. Here in the states we got a very dumbed down powertrain/drivetrain and less sophisticated rear suspension.

            Fullsize Monteros are awesome trucks, both the earlier body on frame ones and the later unibody IRS ones. Very capable and very durable vehicles, yes even after they abandoned the solid rear axle. Even the Montero Sport isn’t bad at all, its reputation marred by BHPH lots the country over. It’s a cheaper 4Runner alternative basically, based on the global L200 pickup.

          • 0 avatar

            I wasn’t a fan of the Gen5 Galant. I had a 96 and it was pretty miserable by modern standards. The 2.4L engine was excellent, but the suspension was overengineered and poorly made in the same time. Not that I mind that the full weight of the car came upon one bolt under the ball joint. Many cars had suspensions like that, including the round generation Tundra and the original Liberty. In my case it stripped and the suspension failed because Mitsubishi engineered it improperly: the range of motion of the ball joint was insufficient and at full deflection the car would place side loads on the threads. The transmission failed at 64,000 miles when a C-clip snapped and a ring gear ground upon its neighbours, resulting in solenoids eating shavings.

            After the 98, they put a new body over the exact same chassis, which looked nice from the outside, but resulted in some strange interior. The seat tracks were the same, because the steering was in the same place, but the body was wider. That resulted in large voids outboard and poor use of inside space. The next generation built at Normal was a significant improvement, which, unfortunately, was not enough to save the brand. Although redesigned properly, it lacked in quality of materials (not sure about the quality of construction though, I didn’t have one).

  • avatar
    Tstag

    Strikes me that Misubishi are generally strong where Renault are weak and Renault are weak where Mitsubishi are strong. I wonder how quickly we might see a country like the UK end up with Renault badged Mitusbishi’s. Renault has been able to generate good market share in the UK but struggled to sell enough cars to justify making models like the Twingo in Right Hand Driver. Mitsubishi makes lots of popular right hand drive small cars which sell well in the RHD Japanese markets. Do the maths….

  • avatar
    NN

    Ghosn has always been a shrewd operator. This seems to have likely been planned…spot a weakness in a partner that has assets that mix well with your company (i.e. kei car strength), strategically out them, watch the stock crash, then pick up a controlling stake at a fire sale.

    In the U.S. Mitsubishi is practically worthless by itself, but does provide a dealer network and poor credit clientele (re: profitable) to sell re-badged products made by Renault/Nissan/Samsung’s low cost production facilities in China/Thailand/Korea/Mexico.

    Maybe bring back an inexpensive Thai-built Montero while they’re at it, real 4wd and stick shift.

    • 0 avatar
      gtemnykh

      “Maybe bring back an inexpensive Thai-built Montero while they’re at it, real 4wd and stick shift.”

      We can only dream. I’ll accept a Hyundai Galloper as a substitute!

      • 0 avatar
        VoGo

        Would you take a Nissan Patrol with a ‘bishi grill?

        • 0 avatar
          gtemnykh

          Yes. Although the latest Y62 Patrol (coming here as the ’17 Armada) is a far cry from the sturdy solid front axle Y60/Y61 trucks that I lust after.

          • 0 avatar
            CoreyDL

            I’m interested to see if they have to jack the price a little bit for the new Armada – as it now becomes a Japan made vehicle.

            I also wonder how they’re going to illustrate to the consumer that it’s now going to be a much better vehicle than the pretty crap, ancient, thirsty, Titan-based one.

  • avatar
    sirwired

    I figure Nissan will use this opportunity to put Mitsu-USA out of it’s misery, and probably just pick up the warranty work at Nissan dealerships. (I wonder what they’ll do with the handful of iMiEV onwers?)

    Beyond that, who knows if Nissan will pick up any of Mitsu’s platforms for sale as Nissan badges in the US. I don’t see why they would; Mitsu doesn’t sell a single product that Nissan doesn’t already have an entrant in.

    • 0 avatar
      CoreyDL

      I can confirm there are actually iMiEV owners, as I saw one once in traffic.

      One of those times where you go “Oh! That’s a… uhh – what was that thing called?”

      • 0 avatar
        VoGo

        After tax incentives, the i-Miev is like $13K new. If it suits your commute, your gas and maintenance savings on your normal car may be offset by the cost of the new Mitsubishi’s depreciation, essentially getting you a commuter car for free.

        But you would have to make your peace with driving a slow egg every day. Maybe Previa owners would go for it.

      • 0 avatar

        I think the Imiev is interesting. The range is to small for me but at that price if I lived closer to work I would seriously consider it. But the reality of the market is it needs to be replaced with something with much longer range. I think one of the editors at either Car and Driver or Road an Track actually bought one for his wife.

  • avatar
    Land Ark

    Now, if he can only get his hands on the Nissan.com domain.

    All in all, pretty diabolical. I suspect we’ve seen the last new models of Mitsubishi that will hit the US shores.

  • avatar
    jpolicke

    Rat out your competitor, wait for the stock to tank, jump on it.
    Stay classy, Nissan.

  • avatar
    seanx37

    I don’t get it. Why? What does Mitsubishi do that Nissan/Renault can’t do better? Or doesn’t already do?

  • avatar
    Joss

    Fuji heavy industries loses a liability.

    Spare all the consolidation. Manufacturers are working towards their own demise with automonous technology. Private ownership down. Car pooling up. Only the wealthy will own & drive their own. They’ll get sued the pants for the accidents they create.

    • 0 avatar
      Lorenzo

      Fuji makes Subarus. Mitsubishi Motors is a spinoff of Mitsubishi Heavy Industries and part of the Mitsubishi keiretsu, a group of companies that own stock in each other, but are otherwise independent.

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