Nissan buys $2.2-bn stake in floundering Mitsubishi
boast greater growth prospects than the companies’ domestic market.
The companies said they plan to sign an agreement by May 25 in which Nissan can name four directors to Mitsubishi Motors’ board. A Nissan-appointed director can also be named chairman of Mitsubishi Motors, according to the filing. The deal will be invalid if not completed within a year.
The deal eases concerns about the viability of an Japan automaker, which 410,000 people across 7,777 companies rely on, according to Teikoku Databank Ltd estimates. Mitsubishi Motors has manipulated fuel economy data of four minicar models, two of which are supplied to Nissan, and improperly tested other Japan vehicles since 1991.
Nissan’s dependence on Mitsubishi Motors showed in April. After suspending deliveries of the Dayz and Dayz Roox models involved in the fuel economy scandal for the last two weeks of April, Nissan’s monthly sales declined 51 per cent for minicars and 22 per cent overall, including standard vehicles.
“Nissan is going to pull somebody’s chestnuts out of the fire,” Kouichi Sugimoto, an analyst at Mitsubishi UFJ Morgan Stanley, wrote in a report Wednesday. “If the deal is realised, it may take time to fully restore Mitsubishi Motors’ business.”
The Tokyo Stock Exchange suspended trading of Mitsubishi Motors shares following reports of the potential sale. Nissan fell 1.4 per cent to 988.1 yen at the close in Tokyo. After overstating the fuel economy of its minicars by as much as 10 per cent, Mitsubishi Motors faces the prospect of compensating owners of those vehicles for their shortcomings in performance. It also may have to pay back Japan’s government for tax rebates that its minicars shouldn’t have been eligible for.