November 5, 2013 / 7:41 AM / 5 years ago

Renault-Nissan expands Mitsubishi cooperation

TOKYO/PARIS (Reuters) - Renault (RENA.PA) and alliance partner Nissan (7201.T) will deepen cooperation with Mitsubishi Motors Corp. (7211.T) to develop small cars and sedans, the companies said on Tuesday.

Carlos Ghosn, chairman and CEO of the Renault-Nissan Alliance, gestures as he speaks at a news conference in the southern Indian city of Chennai July 16, 2013. REUTERS/Babu

The move underscores Renault-Nissan chief Carlos Ghosn’s push for savings across the alliance as well as sub-scale Mitsubishi’s need for new partnerships to share costs.

Nissan Motor Co., 43.4 percent-owned by Renault, will expand a venture with Mitsubishi to develop a new small car including an electric version, while Mitsubishi will introduce two Renault sedans under its own brand.

“I welcome the direction being taken towards this broader cooperation,” Ghosn said in the companies’ statement, which gave no launch dates for the new vehicles.

Mitsubishi and Renault-Nissan “are also confirming their intention to share technologies and product assets related to electric vehicles and latest-generation platforms”, they said.

But the three carmakers are not currently discussing a capital tie-up, company spokesmen added.

Under their existing venture, Mitsubishi builds so-called Kei cars - a boxy, small-engined category popular in Japan for its tax breaks - for sale by Nissan and its own brand.

The operation will add a jointly developed model to include an electric version, allowing Nissan to benefit from surging demand for the vehicles without the need for its own costly Japanese production investment.

Renault will also supply Mitsubishi with two sedans from its Renault Samsung Motors plant in South Korea and another factory to be decided.

The mid-sized cars will be rebadged and sold as Mitsubishis in North America. Under a 2007 trade deal, the U.S. and South Korea are phasing out vehicle import tariffs.

Ghosn, whose twin CEO contracts are up for renewal at Renault in 2014 and at Nissan the following year, is tightening his hold on both carmakers while raising savings targets <ID: nL5E8LFHB8>

He split the job of former Renault second-in-command Carlos Tavares following his August exit, and took similar steps at Nissan on Friday - moving Chief Operating Officer Toshiyuki Shiga to a vice chairman role as the company issued a profit warning with quarterly results.


Nissan shares fell 10.4 percent on Tuesday, the first day of trading since the earnings statement and reshuffle. Mitsubishi ended 4 percent lower, underperforming a 0.2 percent gain by the Nikkei index .N225, while Renault was down 2.8 percent at 1121GMT in Paris.

Mitsubishi - Japan’s sixth-ranked carmaker after Toyota, Nissan, Honda, Suzuki and Mazda - has failed twice in the last decade to cement a global alliance of its own.

The ailing DaimlerChrysler pulled out of a tie-up in 2004 and began unwinding its 37 percent stake. Merger talks with PSA Peugeot Citroen (PEUP.PA) foundered six years later.

On Wednesday the company is due to announce a mid-term plan expected to include a preferred stock buyback from other Mitsubishi group companies, the legacy of a 2004 bailout seen as an impediment to new industrial alliances.

“It would be very hard for Mitsubishi to stay independent as a small-scale carmaker,” said Takaki Nakanishi, head of the Tokyo-based Nakanishi Research Institute. “It needs a good partner.”

For Renault-Nissan, seeking to increase business in second-tier Asian markets where the smaller Japanese carmaker has a solid foothold, “Mitsubishi would be a regionally compatible partner”, Nakanishi said.

Mitsubishi Motors Corp's vehicles and a passer-by are reflected on an external wall at the company headquarters in Tokyo May 23, 2013. REUTERS/Toru Hanai

Mitsubishi still shares a Russian plant with Peugeot and supplies the French carmaker with rebadged versions of its ASX sport utility vehicle and i-MiEV electric car.

“We have currently have three active areas of cooperation with Mitsubishi, and they are not under threat,” a Peugeot spokesman said.

The electric version of the new Kei car is likely to harness Nissan’s lithium-ion battery technology and Mitsubishi motors, Nissan spokeswoman Noriko Yoneyama said.

Additional reporting by Gilles Guillaume, Kentaro Sugiyama, Chang-ran Kim and Norihiko Shirouzu; Editing by Christopher Cushing

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