Chairman and CEO Osamu Masuko, center, and President Tetsuro Aikawa, left, bow during their press conference in Tokyo, Wednesday, May 11, 2016.
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Nissan Motor is taking a 34 per cent stake in scandal-ridden Mitsubishi Motors in what the Nissan chief Carlos Ghosn said was “a win-win” deal.
Both Ghosn and Masuko said the companies have held talks over the years on options to deepen the partnership, with the recent turn of events accelerating the process.
According to Ghosn, Nissan will invest $2.2 billion into the company, making it Mitsubishi’s largest investor.
Mitsubishi admitted on Wednesday that its false reporting on fuel efficiency may now extend to all the vehicles it sold in the Japanese market but insisted it had abided by mileage-test requirements for all cars sold overseas. Mitsubishi Motors cheated on fuel-efficiency testing for nearly every model it sold in Japan in the last 25 years, a report said on May 11, fuelling questions about the size of a scandal that has plunged the automaker into crisis.
The deal is a lifeline for Mitsubishi Motors, which is mired in its third scandal in two decades and has had $3 billion wiped off its market value after confessing to manipulating fuel economy data.
“There is a logic to Mitsubishi Motors needing a partner, since they clearly don’t have the engineering resources to be a player in a world where technology is moving so quickly”, said Maryann Keller, an independent auto analyst in Stamford, Connecticut.
However, Nissan, which was itself rescued by Renault in 1999, remained adamant the Tokyo-based firm, which sells approximately 1 million vehicles per year, could turn its fortunes around.
Mitsubishi has escaped prior scandals, suffers limited consumer confidence, but is reportedly financially sound.
“Nissan is determined to preserve and nurture the Mitsubishi Motors brand. It creates a dynamic new force in the automotive industry that will cooperate intensively and generate sizeable synergies”, said Ghosn, who engineered Nissan’s alliance with Renault, which began in 1999.
Mitsubishi Motors shares, down around 45 percent since it admitted misconduct over mileage on April 20, were untraded just before closing up 16 percent at the daily limit.
The three brands’ combined annual global sales would be about 9.3 million vehicles, approaching the group sales of industry leaders Toyota Motor Corp and Volkswagen AG.
The Tokyo Stock Exchange suspended trading of Mitsubishi Motors shares following reports of a potential sale.
Net income may rise to 525 billion yen ($4.8 billion) in the year ending March from 523.8 billion yen in the preceding period, Nissan said.
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Mitsubishi is facing the prospect of massive fines in relation to the fuel scandal which, it has admitted, could date back 25 years.
