Nissan will take a controlling stake in Mitsubishi after the latter’s fuel-economy scandal in Japan.
The scandal arose when Mitsubishi admitted it had falsified fuel-efficiency tests on at least 13 models over the last 25 years, resulting in a firestorm of negative publicity in its home market.
Mitsubishi said its investigation showed that company managers, under pressure to keep pace with fuel-economy rates reported by competitors, fabricated numbers while using procedures to calculate efficiency that did not comply with Japanese law.
The scandal has not had an impact in the United States and no cars here are affected. In fact, U.S. Mitsubishi sales have increased over the past year.
In Japan, though, the company is reeling, which has prompted Nissan to swoop in with a lifeline.
This new deal will extend the partnership the two automakers have built over the last five years and give Nissan a 34-percent stake. The $1.5 billion deal will make Nissan the largest shareholder in Mitsubishi Motors. Carlos Ghosn, Nissan’s CEO, called the deal “a breakthrough transaction and a win-win” for both companies. The two automakers will be able to consolidate purchasing and technology development while sharing automotive platforms.
For Mitsubishi, the Nissan deal will provide a financial boost to help get through the storm caused by its deceit. Longer term, the company will gain access to Nissan’s research and development teams, which could prove to be a game-changer for Mitsubishi.
Nissan benefits by picking up a substantial stake in Mitsubishi at a great price. The company will gain access to Mitsubishi’s sales network across Southeast Asia and be able to affordably introduce the Nissan brand into new markets.
And don’t forget, Nissan also has a 43-percent stake in Renault. Between Nissan, Renault, and Mitsubishi, the combined companies will suddenly be able to produce nearly as many cars as the top automakers in the world.
Right now, though, the deal with Nissan isn’t about increasing sales.
Osamu Masuko, chief executive at Mitsubishi Motors, said,
It is not an easy task to regain trust, so through the alliance with Nissan, we will be starting a path towards tackling this difficult task.
Would you be more likely to buy a Mitsubishi if it sat on a Nissan platform?