Nissan and Mitsubishi strategic deal

Nissan will spend as much as $2.2 billion (Bt78 billion) to buy a 34-per cent controlling stake in ailing Mitsubishi Motors Corp, which has been heavily hit by a fuel-economy scandal, causing its share prices to plunge by over 40 per cent before Nissan made the announcement.
Nissan CEO Carlos Ghosn said in a phone conference with journalists yesterday that the deal would result in both companies looking for ways to benefit.
He said for the Southeast Asian region, Nissan would benefit from sharing platforms with Mitsubishi as well as learning from Mitsubishi, which has a much stronger presence than Nissan in this region.
“Nissan can learn from Mitsubishi in this region, and Mitsubishi can learn from Nissan in markets that we are stronger,” he said. “It’s a win-win situation, and Nissan wins twice because we have a 34-per cent share in Mitsubishi as well.”
Ghosn, who is also CEO of Renault, another member of the alliance, added that there were no problems with excess capacity from the Nissan-Mitsubishi alliance in this region, which serves as a manufacturing base for both companies’ pickup trucks. He said the Triton and Navara pickup production would go on as usual, but there could be chances for cross-manufacturing between the two brands. Nissan’s assembly plants are located in Samut Prakarn province while Mitsubishi’s facilities are in Laem Chabang in Chon Buri province.
“We will be cross-manufacturing wherever it makes sense,” he stressed. Each pickup will maintain a separate identity as they have different customer bases, but the platforms could be shared.
“We can share parts that are not visible to the customers and share development costs,” Ghosn said.
The much higher level of localisation by Mitsubishi in this region will also help Nissan to increase localisation. He said Mitsubishi suppliers could also start producing parts that Nissan presently needed to import, and the larger economy of scale would result in lower prices for both.
Ghosn said a single platform would cost an average $500 million and sharing costs would result in “big savings” for both sides.
Another area where Nissan and Mitsubishi can collaborate heavily is in plug-in hybrid technology. While Mitsubishi has a comprehensive plug-in hybrid project going on, Nissan is just starting and can dramatically shorten development time with Mitsubishi’s help.