Nissan chief moves closer to building automotive giant with Mitsubishi integration

Tokyo — Carlos Ghosn took another step towards integrating Mitsubishi Motors into a three-way alliance that can produce about 10-million vehicles a year after shareholders at the Japanese car maker approved his nomination as chairman.

Ghosn, already chairman and CEO at Nissan Motor and Renault, joins three other Nissan appointees on the Mitsubishi board after shareholders okayed a raft of proposals on Wednesday. Nissan finalised its acquisition of a $2.3bn stake in Mitsubishi Motors in October after a fuel-economy cheating scandal threatened it with its first annual loss in eight years.

Ghosn, 62, told shareholders at the extraordinary meeting he was confident the enlarged alliance would work.

While Mitsubishi Motors’ scandal triggered the stake sale, the increasing resources required for vehicle makers to stay competitive in developing electric vehicles and autonomous-driving technology has pushed smaller companies to partner with bigger competitors.

Mitsubishi Motors’s future now hinges on how well its integrates with the French-Japanese alliance with a combined scale to rival Toyota, Volkswagen and General Motors.

Executive Changes

Mitsubishi Motors will create executive positions that cut across business units to oversee planning, competitiveness, performance and finance, adopting management structure similar to Nissan’s.

The new managers will report to Trevor Mann, who was Nissan’s chief performance officer and joined Mitsubishi Motors to become chief operating officer. Mitsubishi Motors president Osamu Masuko said the company would move away from a seniority-based compensation system and tie pay with performance to attract the best talent. The new pay structure would apply to directors, executives and some employees.

With other Mitsubishi group companies promising to support Nissan, minority shareholders of Mitsubishi Motors will increasingly find themselves bound to the priorities of a global car-making alliance that employs 300,000 people in factories from Mexico to China. Nissan and the three Mitsubishi group companies together hold about 51% of the car manufacturer.

The three other Nissan-nominated directors to the Mitsubishi Motors board are Mitsuhiko Yamashita, formerly Nissan’s executive vice-president of research and development before joining Mitsubishi in June; Hitoshi Kawaguchi, chief sustainability officer and head of global external affairs; and Hiroshi Karube, the larger company’s global asset manager.

The board also includes two former economy, trade and industry officials. Other Mitsubishi group companies — Mitsubishi Corp, Bank of Tokyo-Mitsubishi and Mitsubishi Heavy Industries — have four representatives on the board.

Conflicting Interests

Some minority shareholders at the meeting voiced concern that their interests may not be adequately represented, given the makeup of the board.

"Nissan may be a shareholder, but it is also a competitor," said Zuhair Khan, a corporate governance analyst at Jefferies Group in Tokyo. "Who will protect Mitsubishi Motors’s own interest?"

With an average age of 67, Mitsubishi Motors also has the oldest board of directors among all Japanese automotive groups, Khan said.

Shareholders approved doubling the limit for annual board compensation to ¥2bn a year from ¥960m. They also backed the introduction of as much as 1 billion yen a year in new equity-linked remuneration.

Bloomberg