Nissan in Talks to Take Control of Mitsubishi Motors: NHKby and
Japanese broadcaster didn't identify sources on possible deal
Fuel-economy scandal now stretching beyond just minicars
Nissan Motor Co. may invest more than 200 billion yen ($1.84 billion) in a play to take over Mitsubishi Motors Corp., which has been battered by a scandal over falsified fuel-economy ratings, Japanese broadcaster NHK reported.
Nissan is in the final stage of talks to effectively acquire Mitsubishi Motors by taking a 34 percent stake, NHK said, citing a person familiar with the situation. Mitsubishi will probably issue new new shares to sell to Nissan in a private placement, Nikkei reported, adding that the automakers are expected to hold board meetings on Thursday to decide on the tie-up.
“There is a logic to Mitsubishi Motors needing a partner, since they clearly don’t have the engineering resources to be a player in a world where technology is moving so quickly,” said Maryann Keller, an independent auto analyst in Stamford, Connecticut. “They’ve always been an also-ran in major markets like the U.S. But they actually have a decent business in Southeast Asia, so they have some attractive assets.”
Mitsubishi, which admitted last month to cheating on the ratings, said on Wednesday that nine more models including a sport utility vehicle may not have been properly tested as the scandal spreads beyond the initial batch of minicars. Orders for Mitsubishi vehicles in Japan have plunged after the company first revealed it had overstated the fuel economy of its minicars by as much as 10 percent. The scandal has also affected Nissan, which sold two of the minicar models under a partnership agreement.
Nissan wasn’t involved in setting the fuel-economy targets for the minicars in question, Mitsubishi Motors President Tetsuro Aikawa said at the briefing. Mitsubishi had raised the fuel-economy targets five times for the minicar models to 29.2 kilometers/liter from 26.4 km/l in a bid to outperform the competition.
Mitsubishi Motors hasn’t sought support from Mitsubishi group companies and aims to solve the crisis on its own, Chief Executive Officer Osamu Masuko said at a Wednesday press briefing in Tokyo. The company should be able to handle compensation with its own resources, he said.
Mitsubishi Motors shares have fallen 43 percent since April 19, closing Wednesday in Tokyo at 495 yen. Its U.S. shares jumped 13 percent to $4.99 at 1:23 p.m. New York time. Nissan’s American depositary receipts fell 1.8 percent to $18.25.
Mitsubishi’s investigation into the cheating has been insufficient, Takao Onoda, an official at Japan’s Transport Ministry, said on Wednesday. The automaker hasn’t provided a complete picture of its misconduct and hasn’t clearly explained whether there was any data manipulation in fuel testing of other models, he said. The company has been ordered to give the next update on its findings on May 18, and retest models involved by the end of June.
The automaker, which had required a bailout from other Mitsubishi group companies more than a decade ago because it covered up deadly defects, said the supervisor in charge of the models had felt the need to boost efficiency to meet targets and mishandled the testing.