Nissan completed its acquisition of a 34% equity stake in Mitsubishi Motors this week becoming the brand’s largest shareholder.
The deal sees Mitsubishi (MMC) join the global alliance with Nissan and Renault making the organization one of the top three automotive groups by global volumes in the world with sales of 10 million units in fiscal year 2016.
Nissan chairman and CEO Carlos Ghosn announced Nissan and MMC would collaborate on joint purchasing, deeper localization, joint plant utilization, common vehicle platforms, technology-sharing and an expansion of the companies’ combined presence in both developed and emerging markets.
“The combination of Nissan, Mitsubishi Motors and Renault will create a new force in global car-making,” Ghosn said in a release.
“It will be one of the world’s three largest automotive groups, with the economies of scale, breakthrough technologies and manufacturing capabilities to produce vehicles to serve customer demand in every market segment and in every geographic market around the world.”
The outspoken auto executive predicted that through its partnership with MMC, Nissan would target synergy benefits worth 24 billion yen in fiscal year 2017, rising to 60 billion yen in fiscal year 2018 and beyond.
The gains will contribute to increased earnings per share worth an estimated 4 yen per share in fiscal year 2017 and 10 yen per share in fiscal year 2018 – on top of any earnings accretion linked to Nissan’s overall shareholding in Mitsubishi Motors.
Nissan offered its assistance at the request of Osamu Masuko, president and chief executive officer of MMC, following the company’s fuel economy crisis. The two companies have cooperated on kei-cars for the Japanese market over the past five years.
“We are committed to assisting Mitsubishi Motors as it rebuilds customer trust. This is a priority as we pursue the synergies and growth potential of our enlarged relationship.”
As part of this strategy, Nissan has nominated four representatives to the board of MMC, including Ghosn as chairman-elect.
The other nominees are Hitoshi Kawaguchi, chief sustainability officer and head of global external affairs; Hiroshi Karube, global controller and global asset manager; and Mitsuhiko Yamashita, Nissan’s current representative on the Mitsubishi Motors board.
At Masuko’s request, Yamashita joined the company earlier this year as executive vice president of development and as a member of its executive committee.
Ghosn has announced a number of other management changes, effective November 1, to allow him to continue to focus on maintaining Nissan’s momentum in delivering performance, while at the same time supporting Masuko at MMC.
Also at the request of Masuko, the management team of MMC will be further strengthened by current Nissan chief performance officer Trevor Mann, who will become chief operating officer of MMC.
Mann will be replaced as chief performance officer by Jose Munoz who will continue as chairman of Nissan’s North American region.