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Mitsubishi officially becomes part of the Renault-Nissan Alliance

Snapshot: The Renault-Nissan- Mitsubishi Alliance will be headed by Carlos Ghosn and will produce 10 million vehicles a year.

In one of the largest acquisitions and mergers of the year seen in the automobile industry, Nissan Motor Co. Ltd. (Nissan) has acquired 34% shares in the Mitsubishi Motors Corporation (MMC). With a purchase worth 237 billion JPY, Mitsubishi has officially become the part of the 17-year old Renault-Nissan Alliance, who now hold the majority stake in the new alliance.

With this move, Renault-Nissan-Mitsubishi Alliance aims to produce 10 million vehicles annually, and work towards enhancing profit margins and earnings per share. Just to give you an idea, the current industry leader, Toyota Motor Corporation produced 10+million vehicles last year. Nissan and MMC will build a five-year alliance in minicars.

The ever dynamic Nissan Chairman and Chief Executive Officer of the Alliance Carlos Ghosn has been nominated to head the new board of MMC. Three other Nissan nominated directors will join Ghosn, including Mitsuhiko Yamashita, Nissan's former executive vice president of research and development, who joined Mitsubishi earlier this year as head of development.

Hitoshi Kawaguchi, Nissan chief sustainability officer and head of global external affairs, and Hiroshi Karube, Nissan global controller and global asset manager will be the other two nominees to join Ghosn in the board. Trevor Mann, currently Chief Performance Officer of Nissan, will become Chief Operating Officer of MMC.

"I welcome Nissan's willingness to provide strategic, operational and management support as our new lead shareholder," said Masuko. "As part of our Board and management team, Nissan will help us to rebuild customer trust in our company and maximize potential future synergies through our deeper alliance."

The two companies have identified a number of valuable synergies in areas including:

- Joint purchasing cost-reduction

- Deeper localization in operations around the world

- Joint plant utilization

- Common vehicle platforms

- Technology sharing

- Cooperation in emerging and developed markets; and

- The use of the Nissan Sales Finance Company to serve MMC customers in any market where mutually beneficial.

Mitsubishi Heavy Industries, Mitsubishi Corporation and The Bank of Tokyo-Mitsubishi UFJ - the three largest institutional shareholders in MMC have welcomed the Nissan's investment and pledged their support for its board nominees. The three Mitsubishi institutional shareholders together with Nissan will hold more than 51 percent of the share capital.

Ghosn said: "The expanded Alliance will be one of the largest automotive groups in the world, with annual sales of 10 million units in fiscal year 2016. The addition of Mitsubishi Motors will build on the entrepreneurial spirit and management cooperation that has characterized our alliance with Renault for 17 years. I am confident this will benefit all stakeholders."

With this alliance, MMC is eyeing a 1 % increase in operating profit margin for FY 2017, 2 % in fiscal year 2018, and more than 2 % points in fiscal year 2019.

We wish all the success to the new alliance and hope that under the dynamic leadership of Carlos Ghosn, Mitsubishi will revive its long lost glory in India. They are currently selling the Pajero Sport SUV in the country, which happens to be their only offering.

You can click here to know more about the Renault-Nissan Alliance!

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