May 8, 2021

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Mitsubishi Motors to reverse its decision to withdraw from Europe

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Mitsubishi Motors is preparing to reverse its decision to withdraw from Europe and build cars in France after months of pressure from Renault and Nissan, a sign of new divisions within the Alliance.

Mitsubishi will formally review the decision at a board meeting on Thursday, according to three people with first-hand knowledge of the matter, after months of heated discussions with its alliance partners.

A framework agreement between the three automakers was reached at an alliance meeting on Monday, two people said. They added that the deal could still collapse.

The decision to let Renault produce Mitsubishi cars at its French factories under a manufacturing deal, if finalized, would force the Japanese company to justify the U-turn – and face the charges it has. ceded to a Renault campaign to protect French jobs.

The coalition between the three automotive groups is maintained by Renault’s 43% stake in Nissan, which owns 34% of Mitsubishi, the smallest of the companies.

The French government’s 15% stake in Renault has fueled the two Japanese automakers’ long-standing fears that the alliance strategy would be heavily influenced by French industrial policy.

In July, Mitsubishi announced plans to pull out of loss-making activities in Europe by canceling model launches and reducing its current lineup. This would lead to the end of all car sales in European markets as early as this year.

Following the announcement, some dealers have already sold operations in preparation for the Mitsubishi release, while others are preparing to become repair garages for the brand.

Agreement to build Mitsubishi cars in France reportedly delayed internally as sign of Renault-Nissan-Mitsubishi Alliance was working under new management teams installed after the arrest and ousting of the former boss Carlos ghosn in 2018.

But the folks at Mitsubishi and Nissan have expressed concern over such a deal that would mean Renault would build Mitsubishi cars – increasing work for its French factories and providing a political boost in the country, where it is cutting jobs.

Executives were particularly worried about a possible repeat of Renault’s 2001 decision to move the Nissan Micra from the Japanese group’s Sunderland plant to its own underperforming Flins plant outside Paris. This was seen as a political initiative by the French group to strengthen union support.

Mitsubishi said there was no change in its policy to stop the development of new models in Europe.

Nissan and Renault said they would not comment on “the speculation”. Renault added that the alliance “still aims to improve competitiveness and allow a more efficient sharing of resources for the benefit of the three companies” and that “there are still ongoing discussions between the three companies”.

Last month, the CEO of Renault Luca de Meo suggested in an interview with the Financial Times that a deal could be made, saying, “We have space in our factories; we have platforms. “

De Meo also suggested that Renault might end up building more cars for Nissan at its French factories, which Nissan has resisted, according to people familiar with the talks. This led to pressure on Mitsubishi from both sides of the alliance, people said.

Before announcing its withdrawal last year, Mitsubishi had only sold 120,000 cars in Europe in 2019, giving it less than 1% of the market share.

The tentative deal reached on Monday is the first big deal between de Meo, who joined Renault as CEO last summer, and executives at Nissan and Mitsubishi, and a test of the relationship between the three parties.

Nissan and Renault focus on turn around their own businesses as well as repairing the alliance, which nearly collapsed in the turmoil that followed Ghosn’s ousting.

De Meo announced a program to save 3 billion euros by reducing plant capacity as part of a corporate overhaul last month, while Nissan aims to save 300 billion yen (2, 85 billion dollars) thanks to its own recovery plan.



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