Mitsubishi Motors deal may help Nissan crack emerging Asia at last
By Aditi Shah and Norihiko Shirouzu
NEW DELHI/BEIJING (Reuters) - Despite years of trying, Asia's fast-growing emerging markets have proved elusive for Japan's Nissan Motor Co (7201.T: Quote), one reason behind its $2.2 billion move this week to take control of scandal-hit Mitsubishi Motors Corp (7211.T: Quote).
Nissan has invested aggressively in countries including Indonesia, deploying targeted models and beefing up distribution in Southeast Asia's largest car market. After three decades, in 2012, it revived low-cost brand Datsun.
But its market share in Indonesia is just 2.5 percent, compared with smaller rival Mitsubishi's 11 percent, in part because of a distribution network that analysts say is still insufficiently broad.
Turbo-charging its business there and in other growing economies in the region is one clear motivation for Nissan, which is pressing ahead with a plan to take a 34 percent stake in Mitsubishi Motors, even as the group tries to recover from damaging revelations over misleading fuel economy data.
"In ASEAN, (Mitsubishi) makes more than 7 percent operating margins. In 2015, we had a negative margin," Nissan Chief Executive Carlos Ghosn told analysts after the Mitsubishi deal was announced. A negative gross profit margin means Nissan is losing money on each sale.
"Their position of strength is our position of weakness. In ASEAN, they can support us a lot," he said.
Boosting their presence in emerging markets is critical for global automakers, but even more so for Nissan, overpowered by Toyota (7203.T: Quote) and its sister brand Daihatsu in Indonesia and by Suzuki in India, for example, where Suzuki accounts for one in every two cars sold.
Mitsubishi, meanwhile, has a more established name in Southeast Asia, where it has a long history producing and marketing trucks. Continued...