Japanese auto major Nissan offered Mitsubishi Motors today, to buy a one-third stake for $2.2 billion, forging an alliance, which is expected to challenge a few of the world's biggest auto groups.
As known, Mitsubishi was recently in the news, for allegedly cheating on fuel economy tests. This has even led to the speculation about the company’s future.
Mitsubishi Heavy Industries currently controls 20%, and as per the latest agreement, Nissan with 34% stake, would be the company’s largest shareholder.
In India, both the Japanese automakers have their presence, though Mitsubishi’s is marginal. The company had a technical alliance with Hindustan Motors, but hardly sells any vehicles in India. Nissan, on the other hand, has a significant presence in India.
It even has another tie-up with French auto major Renault, according to the terms of which they both own stakes in each other. Their global sales combined with those of the smaller Mitsubishi would top 9.5 million units annually, although they will each operate as independent firms.
Giving a clarity that both firms would remain independent, CEO Carlos Ghosn further said, “This transaction represents a potential win-win for both of our companies and promises growth opportunities. We are determined to preserve and nurture the (Mitsubishi) brand. We will help this company to address the challenges it faces, particularly in restoring consumer trust.”
Last year, Mitsubishi, globally, could sold just one million vehicles, and thus has been one of the smallest among Japan's eight major automakers, also including Honda, Suzuki and Mazda.
By 2020, Nissan in India is targeting a 5% market share, for which it plans to launch a new model, every year.
Nissan India Operations President, Guillaume Sicard says, “India is the most challenging market in the world to penetrate. It is tough to crack. The market is still dominated by traditional top two players which have over 65% market share.”
When he was asked about the company’s plans to achieve the sales target by 2020, Sicard said, “For Nissan, we will focus on bringing products from the global portfolio. We have already announced plans to introduce hybrid X-Trail and GTR here. Under the Datsun brand, we would launch new products. We will have one new product every year from the Nissan group.”
By Phani Ch
