Carlos Ghosn, chief executive of Japan’s Nissan Motor and France’s Renault, is to take up the role of chairman at Mitsubishi Motors in the drive to improve on the fortunes of the embattled automaker.
Mitsubishi’s current Chairman and Chief Executive Osamu Masuko said Ghosn has agreed, albeit reluctantly, to take over from him to steer the affairs of the car maker as it seeks to bounce back from the mileage scandal it has been battling for a while.
“I speak for all of us when I say we will give our absolute commitment to support Mitsubishi Motors,” Ghosn said at a news conference organized by the companies. “We are sending a clear message we believe in the underlying strength of Japanese car making.”
The Brazilian-born French said Nissan would do all it can to ensure governance is improved at Mitsubishi and that trust is restored. He also promised to work to guarantee regulatory compliance at the automaker.
Ghosn stated that he has no intention of interfering with the activity of the company’s management, which will continue to be headed by Masuko. He said his own interest is in making sure that the auto manufacturer is managed to meet the expectations of its shareholders.
Nissan became Mitsubishi’s largest shareholder after paying 237 billion yen (around $2.3 billion) for a stake of 34 percent. The deal was formally sealed on Thursday after regulatory approval was finally granted.
The two companies said they would continue to retain their different identities, brands and dealerships.
In April, Nissan agreed to take over at Mitsubishi after the latter admitted to inflated mileage for its minicar models eK Wagon and eK Space. Some mini-vehicles manufactured for Nissan were also affected.
The extent of the scandal became broader when government ordered in August that eight more of the Minato, Tokyo-based automotive manufacturer’s models should no longer be sold. The mileage ratings of the vehicles were said to have been inflated. Affected models included the Pajero SUV and the i-MiEV electric car.
The mileage scandal contributed to worsen Mitsubishi’s reputation which had already been tainted by systematic cover-up of defects, first noticed in the early 2000s.
Ghosn is credited with reviving Nissan from total collapse in 1999 and leading it to become a global brand with steady profits today. The 62-year-old was able to achieve the amazing turnaround at the leading Japanese automaker by cutting costs, further building on his reputation as an efficient manager. He will be expected to work his magic at Mitsubishi as well.
Sales of Mitsubishi vehicles have slumped considerably in Japan, following the disclosure months ago that fuel-economy data had been falsified by employees. The company has also been confronted with huge costs in compensation to numerous thousands of car owners in the Asian country. It is expected to report more than $2 billion in losses for the year ending March 2017.
Nissan and Mitsubishi have plans to exchange technical expertise, including on self-driving technology and gas-electric hybrid system, moving forward. They will also work to cut costs by sourcing raw materials together.
Four new members in total will be nominated by Nissan to the board of Mitsubishi, including Executive Vice President Trevor Mann and Senior Technology Adviser Mitsuhiko Yamashita.
Approval is still required from Mitsubishi shareholders before the changes to its leadership can take effect.