Nissan Is Now One Of The World's Largest Automakers After Joining Forces With Mitsubishi

Industry News / 28 Comments

And it only cost the automaker $2.2 billion. Nice.

Yesterday we learned that Nissan was interested in purchasing a 34% stake in Mitsubishi and now today that news is official. Nissan is injecting $2.2 billion into the troubled Japanese automaker in exchange for a 34% stake. Eagle-eyed readers will notice that 34% is larger than 1/3, which is important as according to the Wall Street Journal Japanese law gives shareholders with over a third of a company's stock veto power over management decisions. That means Nissan is now calling the shots.

That being said this has to be welcome news for Mitsubishi. Although the company says it can handle the financial consequences of its JDM falsified mpg scandal alone this merger could set it up for success down the road. Mitsubishi's struggles in the US (where Nissan does well) are well-documented but the brand does a lot better in Southeast Asia, a part of the world where Nissan has apparently struggled to sell cars. The final financial penalty for Mitsubishi hasn't been set, but both automakers are ballparking it at around $2.5 billion. The deal is expected to be done by May 25th and between then and now Nissan is looking through Mitsubishi's books to ensure that there won't be any other financial surprises. If they find something odd the deal is off.

At the moment this deal looks like a good one for Nissan. The new Nissan-Renault-Mitsubishi group is one of the world's largest automakers with the WSJ pegging the group's total 2015 sales at 9.6 million vehicles. Bigger is always better, especially in the auto industry. The times are rapidly changing and to keep pace automakers need to sink cash into developing new tech. That's cheaper to do when automakers share costs. Of course the question we really care about is what will Nissan do to reverse Mitsubishi's sagging fortunes in the US? We'd love for the automaker to experience a renaissance of sorts but it's also possible that Nissan slowly absorbs and then disbands the brand altogether.

It's too early to speculate now, especially since the deal isn't final. But if things work out in spades then it's possible Japan's other independent automakers could look to join alliances with foreign companies. At the moment this looks like a great power play by Nissan, but let's just see how things play out over the next few months before we lose our sh** entirely. Oh, and something something bring the Evo back.

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