By: Milton Harris
Recently, Nissan shocked the car and financial world with the decision to buy a controlling share (34 percent) of struggling car company Mitsubishi for $2.2 billion. This agreement will enable Mitsubishi and Nissan to share platforms, parts, and facilities.
Mitsubishi’s troubles truly began when its shares values plummeted in the wake of the emissions scandal pertaining to their JDM vehicles. When shares reached half the value they once were is when Nissan decided to pull the trigger on their “strategic partnership”.
This leaves many people wondering: what exactly does this mean for the two companies financially and quality wise? There will essentially be two ways of looking at the situation, both containing some good and some bad aspects of the new alliance.
The first being that the partnership could do wonders for Mitsubishi’s sales numbers and quality. With both of these aspects of the Japanese car company on the downfall, Nissan could be exactly what the company needs to turn things around. Nissan’s marketing strategies are arguably vastly superior to that of Mitsubishi’s and the acquisition of Nissan quality parts on Mitsubishi vehicles could potentially greatly increase reliability amongst their line up.
The second perspective one could take on this subject is that this partnership could bring Nissan’s product quality down. If Nissan finds that using (possibly) lower quality Mitsubishi parts on their vehicles brings production costs down and increases their profit margin, we could see a lower quality Nissan at the current prices. This same factor could result in lower maintenance costs on Nissan’s due to cheaper parts, however that need for maintenance may come more frequently.
Only time will tell how this new mega partnership will go and what the result for the customer will be. There’s no doubt that Mitsubishi will benefit from the alliance, however, it’s a little harder to see how Nissan gain from this.
Featured Image via Pixabay
