Nissan to take 30% stake in Mitsubishi Motors

Blind_Io

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http://asia.nikkei.com/Business/Deals/Nissan-to-take-30-stake-in-Mitsubishi-Motors

TOKYO -- Nissan Motor plans to spend roughly 200 billion yen ($1.84 billion) to buy an over 30% interest in Mitsubishi Motors, hoping to help the embattled carmaker turn itself around in the wake of a fuel-economy scandal.

The Japanese automakers, currently in the final stages of negotiations, are expected to hold board meetings Thursday to decide on the capital tie-up. Mitsubishi Motors is likely to issue new shares to Nissan through a private placement. If the deal goes through, Nissan would become the top shareholder, surpassing Mitsubishi Heavy Industries, which has a roughly 20% stake.

The duo operates a 50-50 joint venture that designs minicars, which are then manufactured by Mitsubishi Motors and supplied to Nissan. Mitsubishi Motors has said that Nissan had no hand in doctoring fuel-efficiency test data for the four models implicated. Minicars account for 60% of its domestic sales volume.

Mitsubishi Motors is financially sound for now, with an equity ratio of 48% and 450 billion yen in cash and equivalents as of the end of March. But a string of scandals since the 2000s has eroded consumer trust in the automaker. The impact on sales will undoubtedly extend beyond minicars.

At the same time, Mitsubishi retains considerable brand power overseas. Its sport utility vehicles are popular in Thailand and Indonesia, with Asia generating more than 50% of the company's group operating profit. To Nissan, whose share in Asia pales in comparison to that of Toyota Motor and Honda Motor, the Mitsubishi brand is appealing.

The carmakers plan to cooperate in electric vehicles as well. By honing electric-car technologies, they hope to counter Toyota and Honda, which are focusing on fuel cell vehicles.

Nissan tapped Mitsubishi as a partner against the backdrop of minicars' growing presence in the Japanese market. Minicars, supplied by Mitsubishi Motors, make up nearly 30% of Nissan's sales volume in Japan. Despite the fuel-economy fraud, Nissan, which lacks minicar manufacturing facilities of its own, has said it hopes to continue the partnership.
This is certainly interesting given Nissan's recent bid to gain more autonomy from Paris.
 
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gaasc

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So....New eclipse using the 370Z platform when Nissan replaces it?
 

Blind_Io

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I bet that Nissan and Mitsubishi will be focusing on their stronger markets, Nissan in North America and Mitsubishi is their stronger Asian markets. There will probably be increased platform sharing, but I doubt Nissan will want more competition in North America.

There has been some speculation that Mitsubishi's stock was intentionally devalued with the MPG fraud to allow Nissan to make the purchase, which then boosted Mitsubishi's stock prices to previous values. I think that is a bit far fetched without there being someone inside Mitsubishi to orchestrate it - and why would they intentionally devalue the stock prices when they are issuing new shares to Nissan.
 
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czelaya

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I don't see why Mitsubishi didn't just offer Carlos Ghosn the job as some type of interim CEO. I'm sure he would bring back some classic models like the Eclipse with a strong 2.0L turbocharge motors and utilize that motor through out its lineup (to build the reputation of Mitsubishi). Offer a 100,000 mile warranty and slowly develop the brand by 1st improving reliability with simple models.
 

bone

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you wonder why mitsubishi didn't offer a job to the CEO of renault??
and if they had, why should he have taken it?
 

JimCorrigan

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So a notoriously crappy/unreliable brand will soon be under minority ownership of another car company currently owned by the French.

Yeah. That'll solve it.
 

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http://www.autotrends.org/2016/05/13/key-facts-surrounding-the-nissan-mitsubishi-alliance/

If you were one of those people concerned that the latest Mitsubishi scandal would do this automaker in, take heart: the company has been saved by a competitor and current collaborator, Nissan Motors.

On Thursday, the two Japanese automakers signed a Basic Agreement forming a strategic alliance between the two companies. To that end, Mitsubishi is issuing new stock shares, enabling Nissan to claim a 34 percent stake in the company. In effect, the move gives Nissan controlling interest in Mitsubishi, allowing the two automakers to cooperate on a new level.

Here are the key facts surrounding the Nissan-Mitsubishi Alliance:

Nothing comes cheap. Following Mitsubishi?s latest scandal (see The Rise and Fall of Mitsubishi), the parent company saw its valuation plunge by US$3 billion. Nissan is paying 237 billion yen or approximately $2.174 billion for a stake in its junior partner.

Other partners are present. Nissan will hold a large stake in Mitsubishi, but three other major stakeholders will also be present: Mitsubishi Heavy Industries, Mitsubishi Corporation and the Bank of Tokyo. Although all three yield much power, they?re expected to cede to Nissan?s wishes once the deal closes by year end. French automaker Renault is also tied in as part of the original alliance forged 17 years ago.

The current collaboration will expand. Greatly. The current Mitsubishi scandal started when Nissan disclosed that its partner fudged on the fuel economy for the tiny ?kei? cars supplied to it by Mitsubishi. Later, it turned out that Mitsubishi had lied on all of its fuel economy figures, but not for cars marketed in the US. That?s a good thing too ? with the EPA slapping and fining automakers such as Ford and Hyundai for exaggerating their fuel numbers and slamming Volkswagen for its own emissions scandal, it is doubtful Mitsubishi would survive a US-backed hit. Then again, is there another shoe about to drop here in the states?

It goes beyond cars
. Building cars and sharing platforms are one thing, but other synergies are present. The automakers will share technologies, purchasing, jointly utilize plants, and collaborate in growth markets. How this relationship unfolds will yet be determined.

Mitsubishi is over as we know it. The alliance between the two manufacturers mean that Mitsubishi is effectively gone as an independent company. That doesn?t mean the Mitsubishi brand will fade away, but it does mean the two companies will cooperate on platform sharing. The cooperation will probably be heavily skewed to Nissan, except for the tiny cars it has bought and rebadged from Mitsubishi for the past five years.

The US market is in doubt. Platform sharing can mean Mitsubishi?s weak US offerings will go through a renewal. By accepting badge-engineered Nissan Versas, Sentras, and Altimas, along with a handful of SUVs, Mitsubishi may soon fill out its entire product line. But is that a good thing? Nissan doesn?t need to compete with itself, especially in the hard-fought, but profitable US market. Mitsubishi?s strength lies elsewhere, especially in emerging markets. Throwing in the towel in the US might be the best course of action to take, allowing Mitsubishi to follow Daihatsu, Isuzu, and Suzuki through the exits.

The Alliance is now the world?s fourth largest automaker. Cars sold by Nissan, Renault, and Mitsubishi currently account for 9.6 million units annually, putting this group immediately behind the top leaders. Toyota is still on top with 10.1 million units sold in 2015, followed by Volkswagen at 9.9 million and General Motors at 9.8 million. What an amazing turn around from the late 1990s, when Nissan was on life support and Renault jumped in with a rescue plan.

Is Further Consolidation Possible?

With Nissan snapping up Mitsubishi and Toyota completing its acquisition of Daihatsu, the global auto industry is seeing consolidation continue. Fiat Chrysler wants a partner, but there are no takers. Still, if the right alliance is forged, then even FCA may soon find itself in the arms of a new suitor.
 
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rickhamilton620

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I don't see why Mitsubishi didn't just offer Carlos Ghosn the job as some type of interim CEO. I'm sure he would bring back some classic models like the Eclipse with a strong 2.0L turbocharge motors and utilize that motor through out its lineup (to build the reputation of Mitsubishi). Offer a 100,000 mile warranty and slowly develop the brand by 1st improving reliability with simple models.
They already offer that, but even that warranty isn't good enough to convince many to consider a Mitsubishi unless they're either:

A. Really desperate for a new car
B. Have some sort of local connection somehow - there's a Mitsu dealer in both York and Lancaster counties...guess where I see a unusually high amount of these things? Hell, the assistant principal at the high school I work at drives a fairly new loaded Outlander Sport.

I put my "it's not that bad" talk where my mouth is and sat in a 2016 Outlander and Lancer - Both cars felt woefully behind the competition in terms of perceived quality. Shocking esp for the Outlander which is both fairly new and was just heavily revised - the dash and door trim materials were on point but details like a flimsy feeling center console lid, chintzy seat heater controls, and underwhelming "clatter" when the doors were closed didn't inspire confidence. And I had not even driven the cars yet.

The cars need work.

Could Nissan pull a Dacia and make Mitsu their no frills low cost brand? That would allow Versa to move up and be actually competitive again (maybe even class leading like the 1st gen) from a perceived quality stand point, especially in the interior.
 
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Blind_Io

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Nissan already has a no-frills low-cost brand, they just don't bring Datsun to North America.
 

Spectre

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If anything, this may accelerate the departure of Mitsu from the US as well as Europe. Wouldn't be surprised if they position Mitsu for Asian markets only.
 
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bone

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and nothing of value will be lost...
 

Perc

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Nissan already has a no-frills low-cost brand, they just don't bring Datsun to North America.
I don't think you're missing much. The blue car is a Datsun onDO, btw. It isn't clear from the photo.



 
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