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Nissan completes acquisition of 34-percent stake in Mitsubishi

It’s official: Nissan is now the largest shareholder of Mitsubishi Motors, the beleaguered carmaker whose fortunes slid further into the gutter earlier this year when officials admitted that the company cheated on fuel-economy tests in its home country of Japan.

Fellow Japanese automaker Nissan announced plans to acquire a 34-percent stake in Mitsubishi in May, at the height of the fuel-economy scandal. Mitsubishi will be incorporated into the Renault-Nissan Alliance, as Nissan calls its partnership with French automaker Renault. Nissan believes that together, the three carmakers will be in the top three automotive groups in terms of global sales volumes.

Nissan did not discuss specific plans for Mitsubishi, although it has already nominated four representatives to the company’s board. One of them is current Renault-Nissan CEO Carlos Ghosn, who was nominated as chairman-elect. At Ghosn’s request, the Nissan board recently named Hiroto Saikawa, the company’s chief competitive officer, as co-CEO. The move was made to help Ghosn better split his time between Nissan and Mitsubishi management work, a Nissan press release said.

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Nissan hopes to gain significant synergy benefits from its relationship with Mitsubishi, likely from streamlining supply chains and sharing development costs. It also expects to earn money on its Mitsubishi shares. Nissan previously sold Mitsubishi-built “Kei” cars under its own brand name in Japan. In fact, it made Mitsubishi’s fuel-economy cheating public.

In April, Nissan reported a discrepancy in the fuel-economy ratings of 468,000 Kei cars, tiny vehicles built specifically for the Japanese market. Mitsubishi soon admitted that 620,000 Kei cars had inaccurate fuel-economy ratings because of manipulations of testing procedures. It subsequently admitted that the fraud was more widespread, although no U.S.-market cars have been affected.

Even before the fuel-economy scandal, Mitsubishi was not in particularly good shape. While it maintains strong sales in certain parts of Asia such as Thailand (something Nissan hopes to exploit), Mitsubishi is fairly uncompetitive in the U.S. A repeatedly-promised lineup of plug-in hybrid SUVs hasn’t materialized, leaving the company with little else to offer U.S. consumers.