Nissan buys 34% stake in Mitsubishi Motors at a time when the latter company was heading into a deep hole dug by itself.
17 years ago, when Nissan was all but heading into oblivion, Renault came to its rescue to script one of the most famous comeback stories the automotive industry has witnessed. From 1999, when Nissan had nearly collapsed, the Renault-Nissan partnership today sells one in every ten cars sold worldwide. In a move that only Nissan can justify, they have decided to buy a 34% share in Mitsubishi Motors for a crazy $2.2 billion, which makes them the largest shareholders in the company.
The news comes in the wake of a scandal over falsified fuel economy ratings in some Mitsubishi-made vehicles in Japan. This includes the 4,70,000 mini-car models that were sourced to Nissan by Mitsubishi. In fact, it were Nissan’s engineers who pointed out the discrepancy in the data regarding tyre pressure which factored in determining the fuel economy of the cars. Mitsubishi had later admitted that they were illegally carrying out these practices in 2002 in order to claim a higher mileage on its cars.
The move has been touted as ridiculous by many, and that apart from the monetary losses, it will be the people’s trust that might be nearly impossible to regain. However, the Nissan-Reanult alliance is onto an entirely different scheme altogether, claiming that they, along with Mitsubishi have a common interest- all-electric cars. Also, the alliance could benefit from Mitsubishi’s strong presence in South East Asia, where Nissan hasn’t been doing too well.
Now one cannot claim that the new alliance won’t last long, as Renault-Nissan have been through a similar situation and know very well how to make things work. This is certainly going to affect Mitsubishi Motors as a whole because Nissan will now be the prime decision makers of the company. Although people might feel cheated, the alliance is definitely a ray of hope for Mitsubishi, and most certainly more than what they could have asked for at this stage.
Nissan Buys 34% Stake in Mitsubishi Motors
– Nissan has taken over Mitsubishi Motors as the majority shareholders, with a 34% stake
– Mitsubishi was recently involved in a scandal over tampering with fuel economy data in its cars sold in Japan.
– This gives Mitsubishi an opportunity to rebuild from ground up.
– Renault had bailed Nissan from a similar situation in 1999.