Nissan Buys 34 Percent of Mitsubishi Stocks; Takes Control of the Company

After Mitsubishi Motors have been tainted with a scandal, it is now proposed to be tied up with Nissan Motor Co. With this merge, Mitsubishi assures significant opportunities all over the world; however some are still in doubt of such promise.

As many may have remembered, Mitsubishi has been involved in a scandal involving it admissions reporting false fuel economy numbers. Other than that, it has been reported how Mitsubishi has struggled with its US consumers for decades now. Last week, Nissan representatives stated that it will buy 34 percent stake in Mitsubishi. This merger between two competitors could definitely help Nissan garner a bigger market including Southeast Asia, which has been recorded to have the highest sale count of Mitsubishi. However, this does not help in their market with the United States, which is something that Nissan still has to work on.

Nissan has already invested in a great number of Asian countries but is still lower compared to the sales of Mitsubishi. According to Nissan Chief Executive Carlos Ghosn, in the Southeast Asian countries, their company made more than 7 percent operating margins, but dropped down to a negative margin in 2015. Mitsubishi has already made impact in the Southeast Asian countries, where Nissan couldn't, thus prompting the merge to increase their revenue. Mitsubishi's mass market with SUVs could help Nissan and give it a better foothold even with small cars.

Analysts claim that Nissan made a good and bold move in buying a great percentage of the Mitsubishi stake. Buying 34 percent of the company, according to Japanese law, makes the buyer in control of the company. Along with that, Nissan could gain the strength of Mitsubishi in their SUVs and electric vehicles plus their savings from combining the engineering of both big companies. Despite being rescued by the Nissan group, they were also held responsible of the Mitsubishi scandal being brought into the light of the world. They were reportedly the ones who told of the company's issue to the Japanese regulators.

Nissan could be the solution to the problems of the Mitsubishi group, however makes them almost the sole owner of the company. This merger could benefit both companies in its own ways.