It seemed like just yesterday that Nissan took a controlling stake in Mitsubishi Motors. Now, some insiders are saying that it’s looking to abandon the project like a crank-walked Eclipse. It’s no secret that Nissan is hemorrhaging cash, a one-two punch due to the weakening of the industry altogether and the compounded by the COVID-19 pandemic. But, Mitsubishi is worth less than half of what Nissan paid in 2016 and wouldn’t do that much to wipe out Nissan’s debt anyway.
Estimates put Mitsubishi Motors’ worth at $950 million, but Nissan’s losses for 2020 are on track to hit $3.2 billion. Still, when you need to raise cash the project cars have to go. Automotive News simply quoted “people familiar with the matter” as sources in their report this morning. For their part, Nissan and Mitsubishi have vehemently denied the rumor.
Nissan took a stake in Mitsubishi under the tenure of Carlos Ghosn, who wanted to build one the world’s largest automobile empire. Famously, Nissan blew the whistle on Mitsubishi’s cheating of Japan’s fuel economy tests on a kei car that Mitsubishi built and Nissan rebadged.
Mitsubishi stock prices plummeted and caused great shame, allowing Nissan to swoop in and buy a 34 percent stake, enough for full control under Japanese law. The timing was so perfect, many said Ghosn orchestrated the entire plan. Of course, Ghosn was arrested for alleged financial improprieties a couple of years later and then fled the country before he could stand trial.
Now Nissan is under a new regime, focused on going back to the company’s core strengths. If they were to sell, though, who would even buy Mitsubishi Motors? They’ve killed off their most iconic vehicles and under the alliance agreement is focusing on small and electric cars. Bloomberg predicts that another company in the massive Mitsubishi Group would be a candidate.
The two companies could still collaborate, as they did before the takeover. Rumors of a shared-platform Pajero/Patrol could still work, in theory. But, without the support of a larger automotive partner it’s unlikely Mitsubishi would survive in today’s climate. It’ll be interesting to see how the corporate intrigue unfolds in the coming weeks.
Adding Mitsubishi Motors to the alliance never made any sense from a business standpoint for Nissan. Their only stronghold is in Southeast Asia, and other than the Kei model, there was too much overlap with Nissan. It seemed more like a Ghosn trophy move.
The likely candidates in the other Mitsubishi Group companies to buy Motors are not doing much better financially. Mitsubishi Heavy Industries lost money last year, just scrapped its SpaceJet program, are looking to offload it’s ship building yard in Nagasaki, and its supply business to Boeing has dried up.
Mitsubishi Electric may make sense if Motors goes full electric, but it comes with lots of baggage. Mitsubishi Trading controlled Motors before Nissan bought them out, so I’d doubt they would be interested to get it back.
Here in the U.S., Motors moved its operations to Tennessee to be closer to Nissan, and their development and purchasing has by now been well integrated into the alliance. How do you even begin to unravel that without hurting Motors?
If anything, the Japanese government may step in to incentivize Nissan to keep Motors. Long-term, I see the band disappearing altogether, absorbed into Nissan, much like Prince Motors.
Hmm, Interesting. Thanks
Mitsubishi still makes excellent cars. Looking forward to the new Eclipse Cross PHEV. Of course the 3000GTs and Dobonairs from yesteryear are gems. Maybe one day…
When the Eclipses and Galants started to get bloated… I lost hope for Mitsubishi in NA. The Lancer Evo coming to NA was great.. but Mitsubishi seemed to just keep it at that.
I figure other avenues of Mitsubishi would keep it afloat….
Well, at least I have my ’91 Galant VR4, #506 of the 2000 built in ’91, and a ’92 base model Galant, and a ’92 Eagle Talon TSi. So I do have some of their more significant models in the U.S. I will admit,some parts are getting a little harder to find. Fortunately, I have a pretty good supply of spares put back. I’m sad that when I’m gone, these cars will probably be treated as nothing special, and disappear, as my daughter has zero interest in cars, and there is no family beyond me. I’m only a few short years from retirement from Toyota Tsusho Group, so maybe I’ll get to enjoy them a while longer, although my health isn’t that great. With the current political climate towards ICE, I may live to see gasoline engines banned from public roads. It will be Rush’s ‘Red Barchetta’ for real, then, because I’m a stubborn old coot, and like my guns, I won’t give up my ICE powered vehicles without a fight!