Nissan's stake buy may help Mitsubishi in India

Mitsubishi's entry into Nissan-Renault alliance may generate synergies in purchase and plant utilisation

Japanese automobile major Nissan Motor's acquisition of a 34 per cent stake in Mitsubishi Motor and the latter's entry into the Renault-Nissan alliance could give Mitsubishi an edge in the Indian market. The alliance partners are expected to share platforms, manufacturing and procurement.
 
The companies did not comment for the story saying that soon they would come out with India-specific plans.
 
Insiders and industry sources said most of the synergies would be in the form of shared platforms, manufacturing and procurement.
 

They agreed that the chances of a turnaround for Mitsubishi, which had lost its focus in India, would be higher if it could ride piggyback on Nissan and Renault.

 
Mitsubishi becoming a member of the alliance between Nissan and Renault will generate synergies in purchase and plant utilisation. They will jointly develop automated driving technologies and plug-in hybrid vehicles.
 
Nissan and Renault have a plant at Oragadam, near Chennai with a capacity to make 480,000 cars a year.
 
Sources said the plant’s current capacity utilisation was around 70 per cent, but as demand was rising for Nissan's Micra and Datsun and Renault's Kwid and Duster, capacity utilisation was expected to increase to 80 per cent by next year.
 
Mitsubishi currently manufactures the Pajero Sport SUV at the Hindustan Motors plant near Chennai. Sources said the alliance could not manufacture the Pajero but upcoming cars from Nissan and Renault could be manufactured in the plant.

 
For over two decades  Mitsubishi had an agreement with Hindustan Motors for the production of the Pajero Sport SUV and the Montero. There were also reports that the company might buy out the Hindustan Motors plant in Chennai, but the plan did not take off.
 
Between April and September 2016 the number or Pajeros produced was 350, down from 1,026 in the same period a year ago. The number of Monteros produced in April-September was 10.
 
“At the global level it was decided the platforms could be shared. If that is the case Mitsubishi can manufacture at the Oragadam facility based on the platform developed by Nissan and Renault,” said a source.

 
Nissan's Terrano and Renault's Duster are on the same platform, while Datsun's redi-Go and Renault's Kwid share a platform. These vehicles are manufactured at the Oragadam facility.
 
Renault-Nissan CEO Carlos Ghosn said it was crucial to develop a B-segment platform for India and other key markets. “We are discussing what the best platform strategy is for us, which will address a very important part of the Indian market,” he said.
 
Mitsubishi is planning to bring its new generation B-segment hatchback Mirage to India and company executives said the other big bet for them was SUVs.
 
While sales and marketing will be different, Mitsubishi may receive help from the alliance to develop and procure parts and manufacture them in India.

 
For Mitsubishi, India was not a strong play despite the fact that the country is one of the fastest growing automobile markets globally. One of the main reasons was lack of resources to launch India-specific models. Being part of the alliance, it now had access to cash also, said the source.