Nissan Motor has acquired a 34% equity stake in Mitsubishi Motors (MMC) and became its largest shareholder.
MMC will also become part of the global Alliance with Nissan and Renault. With the addition of MMC, the Alliance will be in the world's top three automotive groups by global volumes, with sales of 10 million units in fiscal year 2016.
Nissan Chairman and CEO Carlos Ghosn announced that Nissan and MMC would collaborate on joint purchasing, deeper localization, joint plant utilization, common vehicle platforms, technology-sharing and an expansion of the companies' combined presence in both developed and emerging markets.
Ghosn said: "The combination of Nissan, Mitsubishi Motors and Renault will create a new force in global car-making.
"It will be one of the world's three largest automotive groups, with the economies of scale, breakthrough technologies and manufacturing capabilities to produce vehicles to serve customer demand in every market segment and in every geographic market around the world."
Ghosn predicted that through its partnership with MMC, Nissan would target synergy benefits worth JPY24bn ($230m) in fiscal year 2017, rising to JPY60bn($580m) in fiscal year 2018 and beyond.
The gains will contribute to increased earnings per share worth an estimated JPY4 ($0.04) per share in fiscal year 2017 and JPY10($0.1) per share in fiscal year 2018 – on top of any earnings accretion linked to Nissan's overall shareholding in Mitsubishi Motors.
Nissan offered its assistance at the request of Osamu Masuko, president and chief executive officer of MMC, following the company's fuel economy crisis. The two companies have cooperated on kei-cars for the Japanese market over the past five years.
Ghosn said: "We are committed to assisting Mitsubishi Motors as it rebuilds customer trust.
"This is a priority as we pursue the synergies and growth potential of our enlarged relationship."
As part of this strategy, Nissan has nominated four representatives to the Board of MMC, including Ghosn as chairman-elect.
The other nominees are Hitoshi Kawaguchi, chief sustainability officer and head of global external affairs; Hiroshi Karube, global controller and global asset manager; and Mitsuhiko Yamashita, Nissan's current representative on the Mitsubishi Motors board.
At Masuko's request, Yamashita joined the company earlier this year as executive vice president of development and as a member of its executive committee.
Ghosn has announced a number of other management changes, effective November 1, to allow him to continue to focus on maintaining Nissan's momentum in delivering performance, while at the same time supporting Masuko at MMC.
Ghosn has proposed to the Nissan Board, which has approved, the appointment of Hiroto Saikawa, currently chief competitive officer, as co-chief executive officer.
Saikawa will be succeeded as chief competitive officer by Yasuhiro Yamauchi, currently Alliance executive vice president of purchasing.
Veronique Sarlat-Depotte, currently deputy to Yamauchi will assume the responsibility as Alliance executive vice president of purchasing and head of the Renault Nissan Purchasing Organization. She will be supported by Makoto Uchida who will take responsibility for purchasing at Nissan.
Also at the request of Masuko, the management team of MMC will be further strengthened by current Nissan Chief Performance Officer Trevor Mann, who will become chief operating officer of MMC.
Mann will be replaced as chief performance officer by Jose Munoz who will continue as chairman of Nissan's North American region.
Ghosn concluded: "At a time of unprecedented change in the global auto industry, this strategy will build on our existing strengths and management capabilities to ensure increased competitiveness, better products for our customers and attractive returns for shareholders."
