It’s no secret that the Mitsubishi car company was in serious trouble back in 2015. Although it was turning a profit, Mitsubishi was racked with scandal internationally for exaggerating the fuel economy of one of its more popular cars for decades. The result was a loss of over a $1 billion in 2016 and a mighty fall for the once-proud Japanese company. At that point, Mitsubishi’s woes required the aid of one of the biggest car companies in the world, Nissan.
The history of Mitsubishi Motors
The history of Mitsubishi goes all the way back to 1817 when it started as a shipping and trading business. That morphed into Mitsubishi Heavy Industries (MHI) in 1934, a company that specialized in everything from shipbuilding to World War II aircraft. Flash-forward to the twentieth century when Mitsubishi Motors Corporation became a wholly-owned subsidiary of MHI in 1970.
Part of the new company’s early strategy was to form relationships with established car companies outside of Japan. First on the list was Chrysler, who purchased 15% of Mitsubishi Motor Corp. in 1971. The company began cranking out 500,000 cars by 1973, mostly Mitsubishi-built cars that Chrysler marketed in the U.S. like the Plymouth Arrow and the Dodge Colt.
Mitsubishi entered the U.S. market under its own name in 1982 with such forgettable models as the Starion, the Cordia, and the Tredia. A vehicle everyone is familiar with came soon after, the Mitsubishi Montero, also known worldwide as the Pajero and the Shogun. This simple yet sophisticated SUV had true off-road capabilities and was manufactured for a loyal following for decades up until 2006.
Scandal rocks Mitsubishi
The car company is no stranger to scandal. Back in the ’70s stacks of customer complaints that should have been reported to the government were found in an employee’s locker. While investigating, the Japanese government wound up forcing Mitsubishi to recall 620,000 secretly defective cars and trucks.
More recently in 2016, scandal once again rocked Mitsubishi. It turned out they were faking the data about the fuel economy for the Kei, an ultralight micro-cars sold in Japan. These types of tiny cars are rarely seen in the U.S. but represent about 40% of Japanese car sales. The scandal over the faked data caused Mitsubishi’s share prices to plunge.
Nissan’s stake in the company
On May 12, 2016, Nissan spent $2.2 billion to buy a 34% controlling share in Mitsubishi Motors Corporation. The resulting company became known as the Renault-Nissan-Mitsubishi Alliance.
It was a shrewd move by CEO Carlos Ghosn, who picked up the shares at half price after the scandal broke. However, the decision left many experts scratching their heads over what Nissan could gain by acquiring the struggling company.
Mitsubishi’s chairman Osamu Masuko stated the alliance was necessary to respond to fast-moving changes within the auto industry, such as new technology. Joining with Nissan and Renault helps the company share investments and cut costs, resulting in a better product.
The concept for the car company moving forward is “small but beautiful”, meaning despite being one of the smallest players in the car business, it aims to be a profitable one.
At the time of the alliance in 2016, Mitsubishi was strong in plug-in hybrids, and Nissan was developing its electric vehicles. This knowledge came together to create the Nissan Leaf, a highway-capable, all-electric, plug-in car that is the best-selling car of its kind in the world.
However, only two years into the alliance, Mitsubishi once again faced scandal. This time, chairman and CEO Carlos Ghosn was arrested, imprisoned, escaped, and fled to his home country of Lebanon in a wild tale of misappropriation of funds and international intrigue. Since then, analysts have questioned the Renault-Nissan-Mitsubishi alliance’s long-term existence.