TOKYO – Carlos Ghosn, who heads Japan’s Nissan Motor and Renault of France, will become chairman of Mitsubishi Motors, working to restore faith in the troubled automaker after a devastating mileage scandal.
Ghosn, who presided over Nissan’s revival from the brink of bankruptcy in the early 2000s after it formed an alliance with Renault, said he expected it would be difficult to restore Mitsubishi’s shattered reputation.
“I can tell you we will not spare anything to support Mitsubishi. I think it’s possible. It is going to be difficult. It will require tough decisions,” he told reporters.
But the Brazilian-born Frenchman said he believed it was possible. Earlier, Ghosn had described Nissan’s purchase, announced in May, of a 34 per cent stake in Mitsubishi Motors Corp. for 237 billion yen ($2.3 billion) as a “bargain.” With the purchase, Nissan has become the biggest shareholder in Mitsubishi, and Mitsubishi becomes a member of the Nissan-Renault alliance.
“We are sending a clear message we believe in the underlying strength of Japanese car making,” Ghosn said.
Nissan agreed to take charge at Mitsubishi after the company acknowledged in April that it cheated to inflate mileage for two of its minicar models, the eK wagon and eK Space, and mini-vehicles it made for Nissan. No overseas models are affected.
Mitsubishi’s current chairman and CEO, Osamu Masuko, said he only reluctantly agreed to stay on as CEO, at Ghosn’s urging.
“Mitsubishi’s revival is my top priority,” Masuko said. “I am relieved that all the processes are complete, including the payment by Nissan.”
Ghosn said Nissan would provide skills and expertise to help restore trust, enhance regulatory compliance and improve governance at Mitsubishi. As chairman, Ghosn said his focus will be on ensuring Mitsubishi is run in line with shareholders’ interests. Masuko will be in charge of management, he said.
“We trust Masuko-san and we have been working with him for many years,” Ghosn said.
“I have no intention to interfere with the management of Mitsubishi,” he said.
The two companies have said they plan to maintain separate identities, brands and dealerships after the deal. But Nissan has chosen Trevor Mann, an executive vice-president and chief performance officer at Nissan, to be chief operating officer. Mitsuhiko Yamashita, a senior technology adviser at Nissan, will head Mitsubishi’s research and development, Ghosn said.
The mileage scandal widened in August after the government ordered a halt to sales of eight more Mitsubishi models, including the Pajero sport utility vehicle, after finding their mileage ratings also were falsely inflated. The transport ministry said the cruise range on the i-MiEV electric car was also overstated.
Mitsubishi’s vehicle sales in Japan have nosedived and the company faces costs of compensating tens of thousands of vehicle owners in Japan.
On Wednesday, the company revised its profit forecast for the current fiscal year to a net loss of 240 billion yen ($2.3 billion) from an earlier forecast for a 145 billion yen net loss.
Mitsubishi’s image already was marred by a massive, systematic and decades-long coverup of defects that surfaced in the early 2000s.
Ghosn vigorously defended Nissan’s decision to try to straighten out Mitsubishi, despite its tarnished record, noting that similar questions were raised before he helped revive Nissan’s fortunes.
“We’re going to demonstrate, hopefully together, that this is a good decision,” Ghosn said. “Mitsubishi Motors has more potential than it has shown so far.
“We believe in this. We will have to demonstrate it,” he said.
This story has been corrected to show the purchase price for Nissan’s 34 per cent stake in Mitsubishi Motors was 237 billion yen (about $2.3 billion).