Earlier this year, the Japanese automotive giant Nissan announced that it is working on a deal where it can invest heavily in the mileage cheating scandal hit Mitsubishi motors. Now it has formally announced the completion of deal, which will help the company to take a controlling stake in Mitsubishi. Nissan additionally mentioned that it would retain Mitsubishi's chief executive in order to help the company to recover from the recent scandal.
Japan's No. 2 automaker has consented to make a 237 billion Japanese yen investment to buy 34 percent share of Mitsubishi Motors. The said deal will help Mitsubishi to regain trust from its customers specially after overstating the milage on some of its cars earlier this year. On the other hand Nissan is hoping to bank on Mitsubishi’s strong presence in the developing Asian countries and SAARC nations.
Now the alliance between Nissan, Mitsubishi and Renault will become one of the three biggest alliances in the world. This alliance will help sharing technology, platforms, joint purchasing, joint plant utilisation and design sharing among all these brands. Additionally it will also help MMC to regain trust from its customers.
According to Carlos Ghosn, the CEO and chairman of the Nissan-Renault alliance, one of the reasons that he wanted Mr. Masuko, the existing CEO of Mitsubishi to stay, because he wanted the people at Mitsubishi to know that Mitsubishi will remain Mitsubishi. Mitsubishi will not become a subsidiary of Nissan. This sends a strong message that it’s not Nissan that’s going to transform Mitsubishi, but it’s Mitsubishi that’s going to transform Mitsubishi.
Currently, Nissan and Renault are jointly working in India to create a demand for their cars. Renault and Nissan share single production facility, in Chennai, and they uses same car platforms to keep the costs as low as possible. Now with Mitsubishi joining the alliance, one can expect that it will also share the production and other facilities with Renault and Nissan. Mitsubishi currently sells the Montero and the Pajero Sport in India, now after forming the alliance, it is bound to introduce more models across different segments.