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Ghosn Likely to Lead Mitsubishi Board After Acquisition

Adding Mitsu may put Renault-Nissan at top of the sales heap.

by on Oct.19, 2016

Carlos Ghosn is likely to be named chairman of Mitsubishi Motors after Renault-Nissan acquires a controlling stake in the maker.

Renault-Nissan CEO Carlos Ghosn appears to be adding another title to his business card: Chairman of Mitsubishi Motors Corp.

The move, reported by Reuters, is expected to come after Renault-Nissan completes the $2.2 billion acquisition of a controlling stake – expected to be about 34% – in Mitsubishi in the weeks to come. Ghosn will helm a company, Mitsubishi, whose shares have fallen more than 40% this year.

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Ghosn, who helped pull Renault out of a financial ditch in the 1990s and improve Nissan’s earnings in the decade following, orchestrated the ongoing purchase of Mitsubishi after its sales plunged in the wake of its fuel economy rating crisis earlier this year.

The move will give Mitsubishi a lifeline and let Ghosn do what he does best: Fix things, according to CLSA analyst Christopher Richter.

“This is a man who patched up Renault in the 1990s, and he did a lot for Nissan in the 2000s, so I’m sure he looks at Mitsubishi Motors as a new challenge,” Richter told Reuters. “He’s a turnaround artist. This is what he does best.”

(Could Renault-Nissan-Mitsubishi top Toyota for the global sales title? To find out, Click Here.)

Ghosn said the acquisition of Mitsubishi should be complete by the end of the year.

Ghosn leading Mitsubishi’s board would “remove an enormous burden from the Mitsubishi group companies,” he added.

It would also help Ghosn achieve a milestone he set a few years back, and do so earlier that projected: To lead the biggest auto company in the world. The automaker was the fourth-largest in the world in 2015.

Would the acquisition of Mitsubishi push the Renault-Nissan Alliance over the top? “Yes,” Ghosn responded to a question during a Paris Motor Show news conference. “We may become number one, even thought that is not our objective.”

The Alliance could be setting itself for a big surge next year, perhaps reaching volumes of as much as 10.5 million, according to Ghosn. The key would be the takeover of Mitsubishi, which is now in the works.

Nissan and the smaller maker – which sold 1.2 million vehicles worldwide in 2015 – have long worked together. Mitsubishi builds a number of microcars for sale under the Nissan nameplate, for one thing.

(Click Here for details about Renault-Nissan’s new deal with Microsoft.)

Ironically, that’s where it got in trouble when the bigger maker discovered some serious discrepancies in the fuel economy of such pint-sized models as the Roox. Mitsubishi subsequently admitted rigging its mileage testing for the past 25 years. The disclosure devastated both its sales and stock price, threatening to plunge Mitsubishi into bankruptcy.

In May, Ghosn announced plans to acquire a controlling, 34% stake in the smaller maker for a relative bargain price of $2.2 billion. The deal is currently in due disclosure, but the CEO said he expects to complete the move by year-end. That would mean Mitsubishi sales will be added into those of the broader group in 2016 – alongside other partners controlled by the Renault-Nissan Alliance, such as Russia’s Dacia.

The group figures do not include sales by Daimler AG, however. While the German maker has an expanding line-up of joint ventures with Renault-Nissan, they operate on an ad hoc basis, with no formal financial cross-links between the companies. Nonetheless, that alliance has, Ghosn claims, helped drive down costs which, in the process, have helped boost Renault-Nissan sales.

(Nissan wants to redefine mobility. Click Here to see how.)

Despite the possibility of taking over the global sales crown, Ghosn told reporters, “There is no race” to be number one, just a push to be close to whomever is on top. “What matters is not whether we are number one, two or three, but whether the (gap) is small.” That means production costs are similar, and removes one key advantage of whichever company actually is on top.


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One Response to “Ghosn Likely to Lead Mitsubishi Board After Acquisition”

  1. You need to make a correction in the story above. Nissan affiliate Dacia is a Romania-based company, not Russian.