All of the 34 per cent of stake that the Japanese auto maker Nissan Motor has in its Japanese counterpart Mitsubishi Motors is being planned to be sold out by Nissan, according to reports in the media quoting sources with knowledge of the matter.
Analysts said that this move by Nissan, if actually true and it happens, will completely change the composition of the a three-way alliance which also has France’s Renault and an alliance which is the biggest in the world in terms of manufacturing capacity.
Following the news, there was a 5 per cent and 3 per cent spike in the share price of Nissan and Mitsubishi Motors respectively.
“There are no plans to change the capital structure with Mitsubishi,” a Nissan company spokeswoman told the media in an emailed statement in connection to the reports. The same was also said by a Mitsubishi Motors spokesman and added that the company would continue to collaborate within the alliance.
No comments from the third partner of the alliance, Renault, were available on the issue.
According to a report published by Bloomberg, its stake could be sold by Nissan, which has been finding it hard to recover from the pandemic induced downturn, to a Mitsubishi group company such as Mitsubishi Corp which is already the owner of one fifth of Mitsubishi Motors.
The three company alliance of Nissan, Renault and Mitsubishi which was created by former chairman of the alliance Carlos Ghosn would undergo a fundamental change if such a deal by Nissan actually takes place. The relationship between the three partners of the alliance were significantly strained the arrest of Ghosn, who was also the chairman of Nissan back then, in Japan in 2018 over charges of financial misconduct while in power.
Ghosn had reportedly been pushing for a formal and complete merger of Renault and Nissan which was however later put to the side burner, claimed reports, and the three companies instead decided to fix the problems within their alliance.
The issues at the alliance have however been compounded by the novel coronavirus pandemic which has made a recovery form the pandemic hit quite difficult for the companies.
Many analysts however believe that the alliance in itself is unequal.
A very significant, 43 per cent, of Nissan is owned by Renault, which makes the alliance tilted in favour of the French car maker.
Last week, Nissan reported slashed its forecast for its operating loss for the complete year to March by 28 per cent primarily because of a sharp rebound in demand for its vehicles – particularly in China.
Japan’s sixth largest auto maker Mitsubishi Motors said that it si expecting to report an operating loss of 140 billion yen for the current business year.
And in a bid to return back to profitability, production levels and costs are being aggressively cut by both the companies.
(Adapted from News18.com)