Nissan Mitsubishi

Nissan says its deal in acquiring a 34% equity stake in Mitsubishi Motors Corporation (MMC) in the wake of the latter’s crisis will provide it added manufacturing scale and result in cheaper vehicle development costs. The investment is set to cost US$2.2 billion (RM8.8 billion).

Nissan president Carlos Ghosn, speaking to reporters after the acquisition deal was formally announced late last week, said that the deal will result in big savings from a vehicle development point of view, with aspects of design, engineering and production being shared between the two automakers. It will also provide Nissan with a quicker inroad into the development of plug-in electric vehicles, an area Mitsubishi is already involved in.

Analysts say that the buying into Mitsubishi, which comes after MMC’s fuel economy scandal surfaced last month, is a rather opportunistic move and something of a bargain, given the sum forked out to acquire a third’s share of the beleagured automaker.

nissan carlos ghosn

Nonetheless, Mitsubishi chairman Osamu Masuko says that such a merger was inevitable, and “would have happened one day.” He added that the deal was “an important step toward rebuilding trust and stabilising our business.”

The deal will see Nissan effectively becoming the largest shareholder of MMC – ahead of the likes of Mitsubishi Heavy Industries, Mitsubishi Corporation and The Bank of Tokyo-Mitsubishi UFJ – once it is completed. Reports indicate that Nissan will have four nominees as board directors in proportion to its voting rights, and there will also be a Nissan-appointed chairman of the board.

The MMC fuel economy scandal erupted last month when the automaker revealed that it had been using methods that were non-compliant to test for fuel economy since 2002. The cars that brought the issue to the forefront were the Mitsubishi eK Wagon and eK Space as well as the Nissan Dayz and Dayz Roox, which MMC has been manufacturing and supplying to Nissan since June 2013.