Mitsubishi PH plant could become Nissan PH production facility

The 237-billion-yen blindside happened six days ago. Japanese carmakers Nissan Motor Co. Ltd. and Mitsubishi Motors Corp. (MMC) announced that they had “signed a basic agreement to form a far-reaching strategic alliance.”

The news release, sent by Nissan Philippines as a reply to Motioncars-Inquirer Motoring queries regarding the agreement, states that “following an MMC share issue, Nissan will take a 34-percent equity stake in MMC for 237 billion yen ($2.2 billion).”

Pundits noted that the deal is Nissan’s offer of a lifeline for the scandal-wracked Mitsubishi.

Nissan chief Carlos Ghosn was even quoted by several news agencies as saying that the deal would be off if Mitsubishi wasn’t being honest about claims that the fuel-efficiency-related cheating was limited to cars sold only in its home market.

The so-called “strategic alliance” is not really new for the two brands. It will extend an existing partnership between Nissan and MMC, under which the two companies have jointly collaborated for the past five years.

Part of the media queries during the CEO roundtable discussion were: Will the Mitsubishi and Nissan plants in key markets in Asean like Thailand create the problem of excess capacity in the short-term? Will the two brands merge them to streamline operations?

Answers were fairly straightforward. Nissan doesn’t see excess capacity. The two car companies would have the ability to cross-manufacture in one or the other company’s plant, meaning Nissan may be building some MMC products in Nissan plants, and vice versa.

Froilan G. Dytianquin, Mitsubishi Motors Philippines Corp. (MMPC) vice president for marketing, told Motioncars-Inquirer Motoring on May 16 that MMPC’s plant in Santa Rosa “may be a candidate for possible production facility by Nissan in the future, thus benefiting local parts vendors and creating more job opportunities.”

MMPC has maintained its assembly plant for 52 years, with Chrysler models being included at some point. From 1972, however, the assembly facility had been producing all-MMC models.

Currently, it is only the L300 and the Adventure AUVs that are being produced in the 50,000-unit capacity plant.

Last year, MMPC produced around 15,000 units for both L300 and Adventure. The Mirage will be assembled in the MMPC plant soon under the Comprehensive Automotive Resurgence Strategy (CARS) program or Executive Order No. 182.

In a nutshell, CARS provides financial incentives of up to P27 billion for three participating carmakers to enroll three different car models for local assembly, or about P9 billion in incentives per model, on the condition that production outputs for each model must reach 200,000 units over a six-year period, for a grand total of 600,000 locally produced units over six years.

Nissan Philippines Inc.’s (NPI) plant facilities, as enumerated by NPI general manager SJ Huh during the May 12 Navara Sport Edition launch at Nissan North Edsa, include the 21-year-old Star Motor Manufacturing Industries Inc. (SMMII), and the 33-year-old Univation Motor Philippines Inc. (Umpi).

SMMII assembles the Patrol Super Safari (12 units per month), while Umpi assembles Almera (which averages 180 units per month). SMMII has a capacity of 1,800 units per year, while Umpi has a capacity of 4,680 units annually.

“Nissan Motor becoming a major stakeholder in Mitsubishi Motors is eventually a win-win strategic alliance among two great Japanese car companies. Of course, both brands have their strengths, and these will create synergies in procurement, product development such as shared platforms, research and development for vehicle technologies, cross-manufacturing and market growth opportunities,” said Dytianquin.

Dytianquin added: “As for the local impact (of the alliance), it may just be status quo as each brand will stand on its own as defined by the alliance. The impact of this alliance is particular to future models and technologies. As MMPC has a plant in Santa Rosa, it may also be a candidate for a possible production facility by Nissan in the future, thus benefiting local parts vendors and creating more job opportunities. As for MMPC’s CARS program, preparations are underway, particularly the  production of Mirage next year.”

Comparing the two global carmakers, MMC produces 1 million vehicles per year, whereas Nissan produces 4 million.

Winning twice

Nissan stated that both companies would share best practices for regional operations. It was discussed that MMC is much stronger in Southeast Asia, which would give Nissan an opportunity to learn from them. In other markets, MMC would learn from Nissan. “However, Nissan wins twice —both through synergies as well as through its 34 percent shareholding in MMC, giving us 34 percent of their wins, too.”

During the May 13 CEO roundtable, it was discussed by Nissan (Note: as included in the media transcript of Ghosn— with a disclaimer that it was not a word-for-word transcript but to be used for media reference in translating into local language) that if both car companies are “sharing some platforms, for example, with similar products, we may stop a platform at MMC, then the benefits will be much bigger for MMC. They no longer have the cost of the platform, they can share the Nissan platform to develop their branded products, paying Nissan a small fee to use that platform, as well as reducing platform development costs. Nissan can share the platform costs with MMC, thereby reducing purchase costs. We can share the cost of the development of technology, will have lower platform costs, etc. Some platforms will be Nissan, some will be MMC.”

A ‘NisMits’ supercar?

In light of this historic alliance, Inquirer Motoring asked local executives of MMPC and NPI if they could imagine what the future holds when the best of both brands could somehow be combined into one vehicle.

Dytianquin gamely replied: “As for a supermodel brand, it is exciting what the two brands can come up with, because I believe the possibilities are endless given each brands’ capabilities and strengths. For me, I am looking at two champion models, one mainstream, if possible a game changer which will be a leader in performance and efficiency either using hybrid EV or a compact, powerful yet efficient powerplant.”

He added: “The other would be a supercar that would really represent the strength of the Nissan-Mitsubishi strategic alliance. This supercar should be able to utilize each other’s tested and proven vehicle technologies which claimed several victories from various competitions, and integrated with a newly joint development technology from both companies.”

Nissan is a global full-line vehicle manufacturer that sells more than 60 models under the Nissan, Infiniti and Datsun brands. It has a global workforce of 247,500, and has been partnered with French manufacturer Renault under the Renault-Nissan Alliance since March 1999.

MMC is a Japanese automobile company which has a competitive edge in light trucks (pickups and SUVs) in the Asean region. MMC, which has 30,000 employees, has a global footprint, and with production facilities in Japan, Thailand, China, the Philippines and Russia.