Nissan considering divesting its stake in Mitsubishi Motors

Nissan Motor Co. is considering an exit from its partnership with Mitsubishi Motors Corp, wholly or partly, reports Bloomberg news. Nissan has a 34% stake in Mitsubishi and Renault forms the third part of this triangular relationship.

“There are no plans to change the capital structure with Mitsubishi,” said a Nissan press statement. “Like “Nissan NEXT”, we understand that Mitsubishi Motors is working on its ‘Small but Beautiful’ business transformation plan which it announced in July. It is essential for each alliance partner to focus on its core competencies and maximize the use of each other’s assets to accomplish its midterm plans.

Nissan Divesting 2020 Mitsubishi

Nissan, under the leadership of new chief Makoto Uchida since last December, has been scaling back expansion plans adopted under former chairman Carlos Ghosn.

“The basic principle of the Alliance is to work together in areas that are beneficial to each other, for the success of each partner’s brand and growth strategy. The leader/follower scheme announced in May is based on this principle, and it increases product and technology development efficiencies. Using this scheme, Nissan is working together with Mitsubishi Motors not only in developing and manufacturing kei cars, but also in adopting common platforms and powertrains.”

Mitsubishi Motors, Japan’s No.6 automaker, had the same answer, adding the company would continue to collaborate within the Alliance.

Nissan, which is facing a downturn in profits due to the pandemic, might sell its sake to a group company of Mitsubishi, speculates Bloomberg.

If the divestment happens then, the threeway partnership is bound to change. Renault has a 43% stake in Nissan. This Alliance was built by Charles Ghosn, but his arrest in 2018 for financial misdemeanours led to the deal being mired in confusion.

Ghosn was planning a full merger of Nissan and Renault, but plans had to be abandoned midway, according to Reuters sources.

The pandemic has brought along greater difficulties for the auto industry, plunging struggling companies into deeper trouble.

Nissan, which announced its earnings last week, cut its operating loss forecast for the year to March by 28%, helped by a rebound in demand, especially in China. The company’s efforts to reduce fixed costs by 300 billion yen by the end of the fiscal year 2020 are on track. Nissan’s plan to launch 12 new models is also on track, including last month’s launch of the new Nissan Rogue and the premiere of a new compact car in Japan within this year.

Mitsubishi Motors expects to post an operating loss of 140 billion yen for the business year. Both companies are cutting production levels and costs in a bid to return to profitability.

Anna Domanska
Anna Domanska is an Industry Leaders Magazine author possessing wide-range of knowledge for Business News. She is an avid reader and writer of Business and CEO Magazines and a rigorous follower of Business Leaders.

Recent Posts

America is Losing its Appetite for Plant-Based Meat

America is Losing its Appetite for Plant-Based Meat

Most meat in 2040 will not come from animals, says report. However, the recent decline in sales of plant-based meat fell by 1.8 percent compared to the year before, taking declines
9 hours ago
Fusion startup raises $1.8 billion to give us unlimited clean energy

Fusion startup raises $1.8 billion to give us unlimited clean energy

Commonwealth Fusion Systems secures more than $1.8 billion in Series B funding to commercialize fusion energy. The funding round was led by Tiger Global Management with participati
1 day ago
Omicron might push inflation, says OECD

Omicron might push inflation, says OECD

The latest Coronavirus variant, Omicron, which is believed to be more transmissible and severe, might derail growth and recovery and raise costs, according to the Organization for
1 day ago
Who is Parag Agrawal, Twitter’s new CEO?

Who is Parag Agrawal, Twitter’s new CEO?

Indian-born Parag Agrawal took over as the CEO of Twitter as co-founder Jack Dorsey stepped down for the second time in his career. Agrawal is the fourth person to take the reins a
2 days ago
Goldman Sachs rolls out paid leave for pregnancy loss

Goldman Sachs rolls out paid leave for pregnancy loss

Goldman employees are now eligible for 20 days of paid leave for a miscarriage or stillbirth. The investment banking giant is also increasing its retirement fund matching contribut
2 days ago
Boom in Tech IPOs in 2021

Boom in Tech IPOs in 2021

The big tech cloud-based software companies such as Zoom, Snowflake, Asana, Airbnb, Amazon, Salesforce and Palantir have all witnessed a rise in stock prices as work from home and
3 days ago