Nissan and Mitsubishi to tighten Southeast Asia alliance

Nissan and Mitsubishi Motors plan to tighten their seven-month old alliance in an effort to fight dominant rivals in the crucial Southeast Asian automotive industry. The two Japanese companies will deepen sharing of suppliers, services and technology as they target even greater cost-savings than already announced, said Carlos Ghosn, head of a partnership that also includes France’s Renault. Southeast Asia will be a test of the expanded alliance formed when Nissan took a 34 per cent stake in Mitsubishi last year after its rival was hit by a scandal over faked fuel-economy data. The alliance argues that overlaps between the two companies’ operations in the region could help it take market share from competitors such as Toyota. Nissan’s push in Southeast Asia comes at a time when the US car market is coming off its peak and as the group faces intensifying competition in China, its traditional stronghold, from local carmakers. Mr Ghosn said that while 2017 was shaping up to be a “very strong” year for all three alliance companies, Nissan and Mitsubishi had to co-operate in Southeast Asia to improve a market share he said was “way below” its potential. At the first signal there is not a wish but a will to electrify the car market in the Southeast of Asia, we will be there Carlos Ghosn In 2016, Nissan held a 5 per cent market share in the Asean region, according to Morgan Stanley MUFG Securities. While Mitsubishi’s position was stronger with a share of 7 per cent, its competitiveness and product line-up have weakened after cuts to research and development.  “By working together we are going to be able to strengthen product offer, localisation — a lot of things that are going to make both companies much better and much more competitive in the Southeast of Asia,” Mr Ghosn said. He added that sharing of purchasing and logistics would be followed by pooling of technologies and production platforms. “These are things you are going to see in 2018, 2019, 2020,” said Mr Ghosn, who was speaking at the end of a visit to Thailand and Indonesia last week. Mr Ghosn, who is chairman of both Nissan and Mitsubishi, said the alliance would increase capacity usage and utilise its plants in a “much more rational way”. Nissan also recently appointed a Mitsubishi official to head its operations in Indonesia. “We are going to have the same partners, we are going to use the same technology,” said Mr Ghosn, who stepped down as Nissan’s chief executive in April to focus on the alliance. “That’s the only way we don’t duplicate.” Read more Renault and Nissan push ahead in smart race to connect to drivers Alliance’s head of connected vehicle strategy discusses pricing and other challenges  Nissan and Mitsubishi have estimated that the alliance will generate a combined ¥49bn ($438m) in global cost savings in 2017-2018 and ¥100bn in the following fiscal year. Mr Ghosn said the alliance was ready to push ahead with electric cars in Southeast Asia once governments offered the industry support. “At the first signal there is not a wish but a will to electrify the car market in the Southeast of Asia, we will be there,” he said. In addition to Mitsubishi’s stronger position in the region, Hitoshi Isozaki, analyst at Morgan Stanley MUFG Securities, said Nissan could also benefit from the alliance by tapping into the sales and distribution network held by the broader Mitsubishi group, which includes a trading house with ties to Southeast Asia. “It would be difficult for Nissan to achieve its global share target of 8 per cent unless it captures the Asean markets,” Mr Isozaki said, noting that its share of the global car market stood at 6 per cent in 2016.