Today Nissan and scandal rocked Mitsubishi announced they’re forging a new strategic alliance, a merger of sorts to combine forces to share engineering, product platforms, and manufacturing facilities.
The bold move answers the question, what’s going to happen with Mitsubishi? The brand has foundered for the past decade with little in the way of new product and has clearly been financially unable to do much about it.
And in most recent weeks, Mitsubishi has been rocked by scandal by cheating on their mpg ratings in japan – a disgrace as powerful to them as the TDI scandal was to Volkswagen. The difference here is that a weakened Mitsubishi on its own, may not have been able to survive it.
In the new partnership agreement, Mitsubishi will issue 506.6 million new shares, of which Nissan will purchase for 237 billion yen, or about 2.18 billion U.S. Dollars. The purchase will give Nissan a 34% stake in Mitsubishi and make them the majority shareholder.
What does all this mean? First it means Mitsubishi Motors gets to stay in business. The brand really never recovered from the great recession, struggling to invest in new products to fully participate in today’s rebounding car market.
Nissan’s infusion of cash and product platforms means Mitsubishi products to come will likely share their underpinnings and engineering with Nissan. This is good for Nissan in Asian markets where Mitsubishi is strong, but in North America could have vast advantages for Mitsubishi.
A next generation crop of cars like Lancer could share its platform with the Nissan Sentra. A new mid-size sedan could be based on the Altima. These are all products in the Mitsubishi showroom that are weak in the market or missing all together.
When it comes to crossovers and SUV’s, Nissan has a huge portfolio of products in which Mitsubishi can tap especially in replacing aged products in the Outlander Sport which could share underpinnings with Rogue.
The three row Outlander which is very long in the market could share its bones with the Pathfinder. Powertrains too, would likely be shared across the board as most of what Mitsubishi offers under their hoods is all but obsolete and certainly uncompetitive.
Another big area Mitsubishi can gain here is trucks. Here in the North American market, the brand has nothing. Nothing. With Nissan working on a new North American produced Frontier pickup, a re-skinned and re-badged version at Mitsubishi dealers could be a win win for both companies in economies of scale.
The same goes for global trucks and mid-size body on frame SUV’s, enabling the two companies to compound their engineering prowess and manufacturing capacities to keep a number of products in the pipeline that neither might have done on their own.
The new agreement will be finalized by the end of May with Nissan placing new members on the voting board of Mitsubishi. What this will look like in five years is anyone’s guess but the takeaway is that the Mitsubishi Diamond will still exist on dealership signs near you.
