Nissan has entered into an agreement to buy 34 per cent of fellow Japanese manufacturer Mitsubishi, an all-share stake valued at US$2.18 billion dollars.
Nissan confirmed the news today in the wake of Mitsubishi coming clean about falsifying fuel economy figures in Japan, which sparked a drop in the company’s value.
That makes for an interesting mix of companies because there are already Mitsubishi-manufactured, Nissan-branded cars out there already and that Renault owns 43 per cent of Nissan, while Nissan owns 15 per cent of Renault.
Renault rescued Nissan 17 years ago, with Renault-Nissan chairman Carlos Ghosn the man who was charged with turning Nissan around.
Speaking to the New York Times, Ghosn said he was confident he could do the same again for struggling Mitsubishi: “We have been there not a very long time ago. We have the track record to make it work.”
Mitsubishi Motors chief executive Osamu Masuko added: “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.”
The deal, worth 237 billion yen, will make Nissan the largest stakeholder. Ghosn says the move will help Nissan save “billions” through joint development costs, purchasing and sales.
Its combined production volume of nine million vehicles is enough to put it on par with industry juggernauts VW, General Motors and Toyota. Meanwhile Mitsubishi’s strong presence in Southeast Asia is useful to Nissan as that is an area of interest.
There is still a process of a full due-diligence examination of Mitsubishi before the deal is completed so it’s not a done deal just yet, but Ghosn said he was confident its problems are understood.
Mitsubishi ended up in hot water after admitting to using an unapproved mileage test that exaggerated fuel economy. It has since emerged all models in Japan were affected and that has been the case for a quarter of a century.
VW was the first car manufacturer to be caught cheating on emissions and fuel ecomomy figures, a mistake that severely dented its share price and could end up costing billions to fix.