TOKYO • Nissan threw a lifeline to Mitsubishi Motors yesterday as it announced plans to buy a one-third stake in the scandal-hit automaker for US$2.2 billion (S$3 billion), forging an alliance that will challenge some of the world's biggest auto groups.
Japan's second-biggest carmaker will take a 34 per cent stake in Mitsubishi, chief executive Carlos Ghosn said, in return for a proportionate number of board seats and the right to appoint Mitsubishi's chairman.
The news comes after Mitsubishi was plunged into crisis following bombshell revelations that it had been cheating on fuel economy tests for years - sparking questions about the company's future.
Based on Mitsubishi's most recent statements, more fraudulently tested vehicles were sold under the Nissan brand - for which it manufactures minicars - than its own marque.
Nissan's move is a bold way of inoculating itself against the fallout from the scandal, while becoming the top shareholder in Japan's smallest automaker at a discount. Further collaboration between the two will also represent another step towards a much-needed realignment of Japan's crowded car industry.
"This transaction represents a potential win-win for both of our companies and promises growth opportunities," Mr Ghosn told reporters.
"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."
The deal will see Nissan buy about 506 million Mitsubishi shares at 468.52 yen apiece, valuing the purchase at 237.36 billion yen (S$3 billion). Both firms will, however, remain independent of each other, Mr Ghosn said.
"There is no confusion... Mitsubishi is responsible for its own market, for its own strategy. We are shareholders," he added.
Their sales lumped together would top 9.5 million units annually, not far behind the 10.15 million sold last year by Toyota, the world's top automaker, and the 9.9 million by German giant Volkswagen.
Mitsubishi shares skyrocketed more than 16 per cent to 575 yen in Tokyo after the news. The stock had plunged about 40 per cent since the scandal broke last month.
The new tie-up gives Nissan access to Mitsubishi's strong foothold in South-east Asia and some key technology, including hybrids and minicars, which are hugely popular in Japan.
"It is a bargain deal for Nissan, though of course there are risks," Advanced Research Japan analyst Koji Endo said. "This deal will create a win-win situation for all stakeholders, including Mitsubishi group and the government, which wants to protect jobs."
AGENCE FRANCE-PRESSE, BLOOMBERG