Business / Corporate

Mitsubishi Motors clings to Ghosn-led alliance as closer integration fuels revival

After helping Mitsubishi Motors Corp. get back on its feet, Carlos Ghosn is aiming to keep the automaker on stable ground — and benefit the two other carmakers he leads along the way.

In April, Mitsubishi Motors will further integrate with the alliance formed by Japan’s Nissan Motor Co. and France’s Renault SA, by joining their shared parts-purchasing organization. Mitsubishi Motors also will coordinate more closely on business development and overseeing vehicle quality and customer satisfaction efforts as the three companies seek to secure €10 billion ($12.2 billion) in synergies by 2022.

Mitsubishi Motors shares have doubled from lows reached two years ago during a fuel-economy testing scandal that threatened the firm’s existence. The recovery has been fueled by Ghosn coming to the rescue: He orchestrated Nissan’s purchase of a controlling stake in Mitsubishi Motors, and has been taking small steps up until this point to integrate the company with the alliance between the two bigger and more profitable carmakers.

“The alliance is turbocharging the performance of Mitsubishi,” said Ghosn, chairman of both the company and the alliance, in a phone interview. “This is a result of the efforts not only of the Mitsubishi employees working hard to restore their company but the addition of the synergies coming from the alliance.”

Mitsubishi Motors will be further enmeshed with the alliance by joining its engineering, manufacturing and supply chain management activities next year, according to a statement the alliance released Thursday.

Some smaller Japanese parts makers fretted when Mitsubishi Motors joined the Renault-Nissan alliance that they would be next to fall victim to “Le Cost Killer” — a nickname Ghosn earned by closing plants, cutting workers and consolidating Renault and Nissan’s supplier groups when restructuring them in the 1990s and 2000s.

Ghosn, 63, said Mitsubishi Motors joining the alliance’s parts purchasing and supply chain organizations could be “a curse or a huge opportunity” for those companies.

“If you’re a good supplier to Mitsubishi, this is your moment to shine and to be able to expand your business to Nissan or even to Renault if you’re a global one,” he said. “If you’re a so-and-so supplier or if you are a below-average supplier, you have to worry about it, but you were going to have to worry about it anyway. One day or the other, even with or without the alliance, Mitsubishi would have challenged you.”

The moves involving Mitsubishi Motors are consistent with Ghosn’s goal to make the bonds between the alliance’s three companies “irreversible,” the word he used when the French automaker reappointed him to the roles of chairman and chief executive officer last month.

Ghosn relinquished the CEO role at Nissan last year to shift his focus toward preserving the long-term future of the alliance. Renault last month named Thierry Bollore chief operating officer, positioning the 54-year-old as Ghosn’s second-in-command and likely successor.

While Renault, Nissan and Mitsubishi Motors have claimed a multitude of benefits from the alliance, its staying power could be complicated until imbalances in the companies’ ownership structures are resolved.

Nissan is the most profitable of the three and yet has no voting rights to show for its 15 percent stake in Renault, which roughly matches the French state’s holding. Renault, on the other hand, owns a much larger 43 percent share of Nissan’s stock, data shows.

While a merger between alliance partners is one option to cement the companies’ partnership, Ghosn has said this will require the approval of the French and Japanese governments. He reiterated last month that Japan wouldn’t agree to a tighter structure if France remains a shareholder.

Ghosn said he isn’t trying to convince the French state to reduce its stake in Renault.

“They decide to be here or to get out,” he said. “Frankly, I don’t even open this subject. I just consider that I have the shareholders that I have and I try to satisfy them in the best way possible and as much as possible make sure that they understand our strategy and appreciate our results.”

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