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Nissan Motor Co has offered to purchase 34 percent stake in Mitsubishi Motors Corp, which is valued at $2.18 billion. The scandal-hit Mitsubishi Motors will be able to recover and the deal will also favour Nissan’s small car market in the future. It has been reported that Mitsubishi’s board members have confirmed and approved the deal at the board meeting held between the two auto giants.
Mitsubishi is going through a bad phase as it got stuck in the scandal that reveals that the automaker has been cheating on the fuel economy. The cheat results were inspected during the test concluded in Japan earlier this month. The result shows that the automaker cheats the mileage by fiddling with tyre pressures during testing in order to overstate actual efficiency. According to the fresh reports, the fuel economy has been overstated by up to 10 percent in certain Mitsubishi models, which is nothing more than a complete cheat. The scandal has badly impacted the Mitsubishi business. The company has lost $3 billion followed by the drop in the market share.
Due to the scandal, Nissan has been affected as well. Both the carmakers work together as partners in the minicar models, which were sold under a partnership agreement. The car models are being marketed by Nissan in countries like India, Indonesia, Thailand and other Southeast Asian countries. By such cheating, the company is likely to witness a downfall in the region as it aims greater growth against its domestic market.
Once the deal is done, Nissan and Mitsubishi group, including Mitsubishi Heavy Industries Ltd., will collectively hold majority stake in Mitsubishi Motors. Nissan will also hold a recognisable position on the Mitsubishi Motors board, and the chairman of Mitsubishi Motors will be replaced by a Nissan nominee as per the agreement.
Attending a press conference in Yokohama, Nissan Chief Executive Carlos Ghosn stated, “Nissan is determined to preserve and nurture the Mitsubishi Motors brand. We will help this company address the challenges it faces, particularly restoring consumer trust in the fuel-economy performance.”
Representatives of Nissan and Mitsubishi Motors have revealed that the agreement between both the companies will be signed by May 25. On that very day, Nissan would nominate the names for the position of the four directors to Mitsubishi Motors’ board. Eventually, a Nissan-appointed director will be the chairman of Mitsubishi Motors.
Also Read: Nissan X-Trail To be Launched in India By The End Of 2016
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