Nissan has purchased a controlling stake in long-time partner and rival Mitsubishi Motors, saving the troubled company from an uncertain fate.
Mitsubishi has found itself in dire financial straits on several occasions over the past few decades, but unprecedented trouble began last month when it admitted to having manipulated fuel economy figures for a handful of models sold on the Japanese market. To make matters worse, the company later revealed that it had been falsifying data since 1991. The resulting scandal sent Mitsubishi’s stock tumbling by 43 percent, and its new car sales dropped by 51 percent.
The massive loss of capital enabled Nissan buy a 34-percent stake in Mitsubishi for 237 billion yen, a sum that converts to roughly $2.17 billion. When rumors of the purchase broke out, some analysts believed Nissan wanted to invest in Mitsubishi in order to essentially put it out of its misery. However, company boss Carlos Ghosn affirmed the plan is to help Mitsubishi overcome the scandal as quickly and efficiently as possible so that it cam become a productive member of the Renault-Nissan Alliance.
“We will be the largest shareholder of [Mitsubishi], respecting their brand, their history, and boosting their growth prospects. We will support MMC as they address their challenges,” said Ghosn in a statement published online. He added that Nissan and Mitsubishi have already agreed to cooperate in the areas of purchasing, common vehicle platforms, technology sharing, joint plant utilization, and growth markets.
Nissan and Mitsubishi have collaborated in the past. Many of the kei cars — a special category of tiny city cars that benefit from tax breaks in Japan — found in Nissan’s lineup (like the Dayz, pictured above) are essentially re-badged Mitsubishi models. Sales of kei cars have dropped at an alarming rate in recent years, so sharing development costs is important for both companies. Additionally, Mitsubishi is expected to help Nissan secure a foothold in southeast Asian nations like Thailand. Mitsubishi cars and trucks are popular in that part of the world, but Nissan’s market share is small at best.
At the time of writing it’s unclear what the tie-up means for Mitsubishi’s North American operation. We’ve reached out to the company, and we’ll update this story as soon as we hear back.