Nissan on Thursday announced the successful acquisition of a 34 percent stake in fellow Japanese automaker Mitsubishi.
The deal, valued at 237 billion yen (approximately $2.28 billion), was first announced in May following the emergence of Mitsubishi’s own emissions cheating scandal, which mainly affected the Japanese market.
Nissan is now the largest shareholder of Mitsubishi and has a controlling stake in the automaker. And Nissan’s Chairman and CEO, Carlos Ghosn, is also serving as Chairman of Mitsubishi.
The acquisition means the Renault Nissan alliance is on track to be among the top three automakers in terms of sales in 2016. The alliance is predicting 10 million unit sales this year. In 2015, the top three were Toyota (10.15 million), the Volkswagen Group ($9.93 million) and General Motors Company [NYSE:GM] (9.8 million).
Nissan CEO Carlos Ghosn, at the 2015 Tokyo Motor Show
“The combination of Nissan, Mitsubishi Motors and Renault will create a new force in global car making,” Ghosn said in a statement.
Areas of benefit mentioned by Ghosn include economies of scale, breakthrough technologies, and manufacturing capabilities to produce vehicles to serve customer demand in most major segments and in every geographic region around the world.
Such scale has always been a goal of Ghosn, who is famous in the industry for his company turnaround efforts. In 1996 he turned a struggling Renault into a profitable company in just one year. He did the same at Nissan five years later and then looked at forming a partnership with one of the Detroit 3 to get a bigger piece of the North American market, though such a deal was never completed.
Nissan and Mitsubishi have been collaborating for years. They will now further 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 companies can realize synergies worth 24 billion yen ($231.5 million) in 2017, rising to 60 billion yen ($579 million) in 2018 and beyond.