Bangkok Post – May 12, 2016 – Nissan Motor Co will purchase a 34% stake in Mitsubishi Motors Corp, as Japan’s second-largest automaker comes to the aid of its minicar partner rocked by a fuel-economy testing scandal.
Mitsubishi Motors will sell about 237.4 billion yen ($2.2 billion) in shares to Nissan, according to a statement.
The purchase is poised to vault Nissan past Mitsubishi group companies to become the single-largest shareholder of one of Japan’s smallest carmakers.
Kyodo reported earlier the deal would put Mitsubishi Motors under Nissan’s wing, allowing it to bolster its financial base and carry out reforms to restore its brand image tarnished by a fuel-economy manipulation scandal.
Nissan and Mitsubishi Motors said separately in statements that while a capital tie-up is one of various options being considered, no decision has yet been made.
Mitsubishi Motors’ share price surged on the Tokyo Stock Exchange on the news. Its shares were bid-only at 575 yen, compared to the closing price Wednesday of 495 yen.
If the deal is reached, Nissan, a Renault S.A. affiliate, will become the largest shareholder of Mitsubishi Motors and surpass Mitsubishi Heavy Industries Ltd.
Subsequently, the relationship is expected to weaken with the Mitsubishi business group that includes Mitsubishi Corp, which has extended financial and other support since 2004 to the automaker following an earlier scandal over its covering up of recalls.
When combined, sales of Nissan, Renault and Mitsubishi Motors totalled around 9.59 million vehicles in 2015, edging closer to the 9.84 million units of General Motors Co, the world’s third-largest automaker.
Under the envisaged partnership, they will expand the scope of their cooperation to cover development of next-generation environmentally friendly cars, the sources said.
Nissan wants to take advantage of Mitsubishi Motors’ competitive edge in sales in Southeast Asia to increase its group power, the sources said.
Nissan and Mitsubishi Motors set up a joint venture in 2011, and are currently engaged in development of minivehicles. Mitsubishi Motors admitted to exaggerating the fuel economy of minicars, including two models supplied to Nissan.
Since the manipulation of fuel economy data surfaced in late April, Mitsubishi Motors has suspended minicar production at its factory in Okayama Prefecture, western Japan.
The scandal caused both automakers’ sales of minicars with engines no larger than 660 cc to roughly halve in April.
Mitsubishi suffered a 44.9% year-on-year plunge in minivehicle sales to 1,477 units, while Nissan Motor saw a 51.2% dive to 5,574 units, according to the Japan Light Motor Vehicle and Motorcycle Association.