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Nissan buys the controlling share in Mitsubishi for $2.2 Billion

In the wake of a fuel economy cheating scandal that has shocked the Japanese automotive industry market, Nissan has purchased a controlling 34-percent stake in Mitsubishi Motors.

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Nissan announced that they signed an agreement to invest $2.2 billion in exchange for a controlling 34-percent stake in Mitsubishi Motors. Nissan CEO Carlos Ghosn said the agreement would cover purchasing, common platforms, joint manufacturing facilities, technology development and target shared cost savings. Nissan will also take control of Mitsubishi’s board of directors. They will contribute corporate governance and management expertise to help Mitsubishi restore their public trust. Expect the agreement to be finalized by the end of the month.

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While Nissan’s investment is being called as a “strategic alliance,” it comes in the wake of Mitsubishi admitting, it had been rigging fuel economy numbers on Japanese-market vehicles since 1991. Since April 19th, Mitsubishi’s new car sales have dropped significantly, and the automaker’s stock price has fallen 43 percent. The scandal affects Nissan, as well, since the automaker sells two rebadged Mitsubishi models in Japan. The Environmental Protection Agency is currently investigating U.S. models, but for now the fuel-economy scandal only affects Japanese-market vehicles.

This won’t be the first such strategic alliance for Nissan. It’s been joined up with French automaker Renault since 1999, and both companies are run by the same CEO, Carlos Ghosn. Other brands in the alliance include Infiniti, Dacia, Datsun, and Lada. This does make the Renault-Nissan alliance one of the biggest global carmakers out there—in 2015 its combined output (including Mitsubishi) was 9.6 million vehicles, almost rivaling the big three of Toyota, General Motors, and Volkswagen.

Luka Hribar

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