Recent reports have indicated that Mitsubishi is trying to attract new partners.
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As Mitsubishi Motor Corporation prepares to release its recovery plan at the end of the month, there is speculation linking it to possible production alliances with other automakers – Peugeot and Nissan being the front-runners. Such an arrangement would give Mitsubishi the breathing space it needs to work on restoring its business following the scandals of recent times.
Mitsubishi has been in deep financial trouble since last year when DaimlerChrysler, its main backer decided to discontinue its financial backing of the Japanese manufacturer. The company also suffered a significant downturn in sales following the embarrassing exposure of a manufacturing defects cover-up. The company has since been trying to ally with other vehicle manufacturers, with little success thus far. However, recent reports have suggested that this may be about to change.
Mitsubishi has been linked with Peugeot regarding a potential tie-up in the future. Although an equity swap between the firms seems unlikely, there are suggestions that Mitsubishi will produce vehicles for the French manufacturer to the tune of 40,000 units per year. The move would see Mitsubishi make use of its heavily under-utilised manufacturing base – although for Peugeot, which produces 1.3 million vehicles a year, this is a more a vote of confidence in Mitsubishi than a financial bailout for the Japanese company. A similar deal has also been rumoured with Nissan.
Such deals are expected to be part of the recovery strategy that Mitsubishi is planning to announce by the end of January. Further manufacturer alliances are also possible, but potential partners will be understandably wary of associating with Mitsubishi – it remains Japan’s only unprofitable carmaker, and it saw sales drop by 41% during 2004.
Without the help of other manufacturers, Mitsubishi will continue to struggle in the marketplace. The company’s reputation remains tarnished, and the effects of this can only be compounded by the success of the other Japanese firms. As Mitsubishi attempts to repair and re-invigorate its own brand, it needs the help of its rivals via such partnership deals to keep it going in the interim.
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