Nissan profits drop, taking $2.2B stake in Mitsubishi
Tokyo — Nissan Motor Co. is investing 237 billion yen ($2.2 billion) to take a 34 percent stake in scandal-ridden Mitsubishi Motors Corp. in what Nissan Chief Carlos Ghosn said is “a win-win” deal intended to repeat the success of his Nissan-Renault alliance.
Ghosn appeared with Mitsubishi Motors Chairman Osamu Masuko at a hastily called news conference Thursday in Yokohama, where Nissan is based. Under the deal, Nissan becomes the top investor in Mitsubishi Motors. Mitsubishi group companies — Mitsubishi Heavy Industries, trading company Mitsubishi Corp. and the Bank of Tokyo-Mitsubishi UFJ — will continue to hold stakes in the automaker, but they have agreed to support the alliance with Nissan, both sides said.
Mitsubishi Motors has been rocked recently by a scandal over cheating to inflate mileage for minicar models. Reporters peppered Ghosn with questions about whether he was worried the scandal may grow.
“This is a breakthrough transaction and a win-win for both Nissan and Mitsubishi Motors. It creates a dynamic new force in the automotive industry that will cooperate intensively and generate sizeable synergies,” said Ghosn, the Brazilian-born Frenchman who engineered Nissan’s alliance with Renault, which began in 1999.
Adding Mitsubishi will be a plus in sharing platforms, purchasing and technology, and Nissan will benefit from its strengths in Southeast Asia, Ghosn said. The automakers will maintain separate identities, brands and dealerships, Ghosn and Masuko said.
Under the deal, Nissan will purchase 506.6 million newly issued Mitsubishi Motors shares. The deal is subject to a formal signing of an agreement, regulators’ and shareholders’ approvals, but is expected to close by year’s end. Nissan nominees will join the board at Mitsubishi Motors, including the chairman of the board.
When asked whether partnering with a company prone to fraud might be risky, Ghosn said he trusted Masuko.
“Obviously the problem is very serious, we don’t take it lightly. At the same time there are solutions, not only to respond to this problem but also to avoid these kinds of problems,” Ghosn told the Associated Press after the news conference.
Masuko apologized for the scandal and welcomed the alliance with Nissan.
“This agreement will create long-term value needed for our two companies to progress toward the future,” he said.
Tokyo-based Mitsubishi Motors, which makes the Outlander sport utility vehicle and the i-MiEV electric car, acknowledged last month that it had systematically falsified mileage data for its eK wagon and eK Space light passenger cars, which were produced for Nissan as the Nissan Dayz and Dayz Roox.
It is common for a manufacturer to sell a product made by another company under its own brand.
The scandal surfaced after Nissan did its own mileage tests and raised questions. Nissan does not have minicars in its lineup, and placing Mitsubishi under its group umbrella is one solution.
But Nissan, which makes the March subcompact, Infinti luxury models and Leaf electric car, will face a major challenge in repairing Mitsubishi’s tarnished reputation.
Also on Thursday, Nissan reported a 40 percent plunge in January-March profit to 71 billion yen ($651 million), as sales dipped and currency perks faded.