Mitsubishi, hit and crippled by its unfolding fuel economy scandal, has bowed to the perhaps inevitable and accepted a bid from Nissan for 34 per cent of Mitsubishi Motors. It ends 99 years of independence for the Mitsubishi car brand, which began making motor vehicles in 1917 when Mitsubishi Shipbuilding branched out into cars with a copy of the Fiat Tipo 3.
The 34 per cent stake will make Renault-Nissan Mitsubishi Motor's biggest single shareholder, and already Renault-Nissan boss Carlos Ghosn is talking about the potential to share costs across platforms, engines and hybrid systems.
“This is a breakthrough transaction and a win-win for both Nissan and Mitsubishi Motors” said Ghosn. “It creates a dynamic new force in the automotive industry that will cooperate intensively, and generate sizeable synergies. We will be the largest shareholder of MMC, respecting their brand, their history and boosting their growth prospects. We will support MMC as they address their challenges and welcome them as the newest member of our enlarged Alliance family.”
Those challenges are manifold. Not only must Mitsubishi now try to shrug off the taint of scandal following admissions it was lying about fuel consumption figures for several Japanese-market models (a fact, ironically, originally uncovered by Nissan itself) but it must quickly rejuvenate a models range which, in Europe at least, has fallen well behind the competition in terms of styling and dynamics.
Osamu Masuko, chairman of the board and chief executive of Mitsubishi Motors, said: "Through its long history of successful partnerships Nissan Motor has developed a deep knowledge of maximising the benefits from alliance partnerships. This agreement will create long term value needed for our two companies to progress towards the future. We will achieve long term value through deepening our strategic partnership including sharing resources such as development, as well as joint procurement."
While you can sense the tinge of regret in Masuko’s statement, Mitsubishi insiders are saying that a change of ownership is an important step to atoning for its recent scandal, even though it was revealed this week that no European-market cars were affected by the falsified fuel consumptioon claims. A Mitsubishi spokesperson, speaking ahead of the announcement of the Nissan buyout, said that “as a result of that reinvestigation and reconfirmation, we hereby confirm that our testing methods and data are proper and in accordance with European regulations, and also proper for EU certificates. We sincerely apologise again to all of you for your concern and inconvenience. We put top priority on your confidence in our products and we will devote ourselves to delivering products which satisfy all of our customers.”
Nissan has said that it's stake in Mitsubishi is costing it around €1.9-billion, and it will be looking for some rapid returns on investment. Doubtless, one of the first priorities will be to combine the efforts of Nissan, Renault and Mitsubishi in electric cars. Renault-Nissan has already invested more than €4-billion in electric car development, but Mitsubishi, working on much smaller budgets, is generally acknowledged as one of the leaders in electric car tech, and in particular on very efficient in-wheel motors. The Outlander PHEV plugin hybrid has also been something of a breakthrough car in Europe in terms of finding buyers for part-electric motoring, so the opportunity for Nissan and Renault to benefit from Mitsubishi's technical expertise is clear.
Mitsubishi will in turn benefit from using Renault-Nissan’s CMF family platform for future models, which should allow it to expand and update its model range at a much lower cost than developing go-it-alone platforms or upgrading its existing technology.
Before that, there is work to be done. Mitsubishi’s share price tumbled in the wake of the fuel economy scandal (which, in fairness, allowed Nissan to pick up its controlling stake at a relatively bargain price) and sales have suffered too. Plus, even though the scandal is being confined to Asian markets, Mitsubishi is expected to have to pay fines equivalent to at least €1-billion.
Nevertheless, it seems Renault-Nissan has faith in its new partner. “It represents a win-win,” Ghosn said. “We believe in the potential of Mitsubishi Motors.”
