Renault-Nissan pounces on Mitsubishi

pollution scandal and share-price plummet opens the door for a Nissan takeover

MARK SKULLEY

NISSAN’S bold raid on cashstrapped Japanese rival Mitsubishi in May could go down in history as one of the shrewdest automotive business deals ever struck.

It started with an admission by Nissan that some of its cars sold in Japan had cheated on fuel tests. However, while they wore a Nissan badge, the scandal took a very different turn after Nissan allegedly planted the seed that all the cars at the root of the fuel scandal were supplied by its rival.

The news, and fears that heavy fines from Japanese regulators could follow, sent Mitsubishi’s share price into freefall. It was everything Nissan was waiting for.

In a spectacular late-day coup, Nissan picked up a $3 billion slice of Mitsubishi for half of what it would have paid just a few weeks earlier. Added to the 13 percent of the carmaker that it already owned, Nissan’s 34 percent share of its rival is enough under Japanese business laws to give it a controlling stake.

Mitsubishi Motors president Tetsuro Aikawa is now poised to step down, as Nissan prepares to replace him with one of its own choosing. As well as ruling the boardroom, Nissan will replace key development staff with forces loyal to Nissan’s cause.

What’s in it for Nissan? For one, access to the lucrative Asian market, where Mitsubishi has a strong presence and Nissan virtually none. Nissan will also look to tap into Mitsubishi’s plug-in hybrid technology, as well as potentially replace its rival’s undercooked Triton work ute with one based on Navara underpinnings, which will already form the basis for upcoming utes from Renault and Mercedes-Benz.

The deal appears to have been surgically executed by Nissan CEO Carlos Ghosn.

The charismatic, Brazilian-born boss of the Nissan-Renault alliance would stride around an industry showpiece like the Tokyo motor show with a gaggle of followers

in tow – motoring and business journalists, industry analysts and his own executives hanging on every word with pens and microphones poised.

This same audience – spread across the broader Asia-Pacific region – dialed into a press conference in mid-May when Ghosn explained the rationale for Nissan’s raid (photo opposite).

The press conference got the big picture from Ghosn but without much elaboration during the question-and-answer session.

Ghosn conceded the Mitsubishi brand would take “some time” to recover, but argued the tie-up would benefit all sides due to savings from using common platforms and technology, and cross-manufacturing of product.

He said there would be “absolutely no merger” between the companies and denied that the group would be left with excess capacity before plant closures.

One new platform costs about $US500 million and lasts 15 years, on average. Nine common platforms meant “big savings” even though companies in the group would still have to pay a fee.

According to Ghosn: “It’s been said that customers don’t care about platforms … what they care about is the design, the material, tuning of the car, functionality of the car, and all of this is something that is specific to each brand.

“Renault and Nissan have been sharing engines and ... transmissions and ... a lot of modules of the cars and still the cars are very, very different … there is absolutely no cannibalisation between the two brands.”

Nissan and Mitsubishi have Navara and Triton in the vital ute market, and Ghosn said it was “very possible that we’re going to use the same platform, but we are going to develop the car differently”.

Similarly, both brands will work together on future electric cars.

“Again, don’t expect the cars to be look-alike … the designs are going to be different and the specifications are going to be different. But the core technical choices will be common.”

Ghosn noted that the Mitsubishi brand was strong in South-East Asia and that improving Nissan’s performance in kei cars, a Japanese category of small vehicle, was another factor in the deal.

NISS-MITSU-NAULT?

Adding Mitsubishi to the Renault-Nissan alliance gives the new group unprecedented global reach

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