Breaking news from Japan tonight: Nissan has agreed to take a 34 percent controlling stake in Mitsubishi Motors in a deal worth $2.2 billion, according to Bloomberg. It is now the single largest shareholder in the beleaguered automaker, even larger than than parent company Mitsubishi Heavy Industries, which owns 20 percent.
Mitsubishi has been hurting since their last scandal in 2000, regarding a massive coverup of defects dating back to 1977. In the last few years, a large amount of talent has jumped ship and the recent revelation of Mitsubishi Motors’ cheating on fuel economy has only shortened the noose.
Since April 19th, when the scandal came to light — which, incidentally, was brought to the attention of the Japanese government by Nissan, so conspiracy theorists start your engines! — its stock has plummeted 43 percent and orders for new cars have fallen as much as 51 percent. CEO Osamu Masuko stated that Mitsubishi Motors hopes to sort out these issues on their own without involving any of the other Mitsubishi Group companies in this issue.
It now appears that the solution is Nissan, who will benefit from Mitsubishi’s kei car expertise (currently, all of Nissan’s kei cars are rebadged Mitsubishis and Suzukis) and its reach in regions like southeast Asia. In fact, domestic sales are only 10 percent of Mitsubishi’s total business.
It will be interesting to see how this consolidation from two major players in the Japanese auto industry play out. Almost exactly one year ago, Toyota and Mazda also entered into a technology sharing partnership. Juggernauts are being created, and the message to other Japanese automakers might be to merge or get left behind.
The Nissan-Mitsubishi deal will be formally signed May 25.