Commentary: Mitsubishi + Nissan + Renault = ???

It has happened.

"It" being the folding of Mitsubishi Motors into the Renault Nissan Alliance. It was announced at a press conference with Alliance chairman Carlos Ghosn stating that he will chair Mitsubishi, as well as Renault and Nissan. A summary of management changes were announced to cover the entire Alliance, but in particular Nissan and Mitsubishi.

Surprised? Not really…maybe a tad.

The mixed reaction is set in several themes. One, the hope that Mitsubishi would be able to recover by itself began to diminish in the face of a lack of progress for the company to self-rely on its key markets. USA sales became too stable for real growth to happen, even after adding thee Mirage G4 to the lineup. This is not to say that Mitsubishi Motors North America is not trying hard enough – they are. Still, the brand is about to caught up in a potential flattening of the overall market, where even the strongest OEMs could see flatter growth into 2017.

The other theme is the damage caused by the original joint venture in making kei cars for the Japanese Domestic Market in which Mitsubishi was caught reporting false fuel economy figures to the government. Recovering from its most lucrative market – for both Mitsubishi and Nissan – took a slower pace that what was hoped. Though it affected domestic sales and revenue, the global impacts were looming if the losses were not contained within its Japanese operations.

I believe in the back of Ghosn's mind – along with his colleagues – that Mitsubishi had advantages in markets where they truly needed a presence. It is not that Nissan needed to exploit them, but the Alliance as a whole could definitely use some of Mitsubishi's better assets to either augment or utilize across all three main companies.

For the latter point to be fully realized, Ghosn did announce that there will be "synergies" that will align Mitsubishi with the rest of the group. Remember, Ghosn is also known as "Le Cost Killer." So far, about US$241 Million in "synergies" will be undertaken "immediately." According to The Automotive News, Ghosn stated that these "synergies" were designed to increase profitability at Mitsubishi.

People have been speculating as to how the addition of Mitsubishi to Renault and Nissan will affect product lines. Two items have been announced to that effect. One, a Mitsubishi minivan will be resold as a Nissan product in Southeast Asia. The second will be significant: The plug-in hybrid technology seen on the Mitsubishi Outlander PHEV will become available as a common technology across the Alliance.

Funny, because we have not seen an Outlander PHEV available in the USA yet.

Aside from that point, the PHEV technology seems like a great augmentation to Renault and Nissan's electric vehicle programs – the Nissan Leaf and the Renault Zoe, in particular. Mitsubishi's PHEV driveline makes sense in places that are struggling to accept the Leaf and Zoe as sustainable transportation options. It also gives the opportunity to add this to mainstream models in more markets globally. An opportunity to augment, rather than exploit something of Mitsubishi's over to Nissan and Renault.

We could speculate as to what could happen next across the Alliance. However, I could look at the entire history of the joint efforts of Renault and Nissan to see where it might take Mitsubishi. For one, the Alliance brought on platform synergies to both Renault and Nissan. Renault's ideas about creating more interior space and improving ride quality have been evident in several Nissan models – the Versa, for example. By sharing common platform DNA across Renault and Nissan products not only helped cut costs across the Alliance, but created products that were easily accepted in global markets, in particular emerging ones.

Yet, there are plenty of instances of badge engineering, as the Alliance saw several products resold as either Renaults or Nissans, even when they were originally conceived by companies within either group. The Dacia Duster is a symbol of the Romanian automotive industry making a substantial foreground on the global scene. Its low priced approach in the small SUV market was heralded as a huge advance for it. It has since been sold as a Renault in many markets around the world. Luckily, we have not seen a Nissan version of the Duster – or, have we? We have seen Renault-badged versions of the Nissan Micra/March sold in a few markets, however.

It does open up a box of speculation for Mitsubishi, if it wants to continue in high profile markets. We know there is a slew of new SUV product that have been introduced and speculated for the three-diamond brand. Now that Mitsubishi has been folded into the Alliance, the question of whether these products would go into production has to be asked. Though Nissan is seen as the standard for SUVs and CUVs within the Alliance, Mitsubishi has also been seen as the standard for true 4WD systems the world over.

But, there are also conflicts within the Alliance in terms of strengths. Both Nissan and Mitsubishi build solid truck lineups – the Navarra/Frontier NP300 and Triton L200, respectively. Both global pickup lines are considered amongst the best in the world. Can both platforms exist within the Alliance?

The only way we will know how product will shape Mitsubishi Motors under the Renault Nissan Alliance is to allow the folding to take place and see where the "synergies" will occur. This story is still fresh and is the situation is fluid. However, the action of folding Mitsubishi into the Alliance has taken place. We can only see what will transpire next.

Photo by Randy Stern

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