Auto giants move closer in business alliances

Nissan purchases 34% of Mitsubishi stock while Suzuki and Toyota talk about partnership.

Ghosn and Masuko

Nissan-Renault's Carlos Ghosn and Mistubishi's Osamu Masuko seal the deal? Image: Nissan

Nissan's 237bn Yen ($2.27bn) investment will allow Mitsubishi Motors Corp (MMC) to become a full member of the 17-year strong global alliance between Nissan and Renault.  The MMC management team will include personnel from Nissan.

"I welcome Nissan's willingness to provide strategic, operational and management support as our new lead shareholder," said MMC President and Chief Executive Officer Osamu Masuko. "As part of our Board and management team, Nissan will help us to rebuild customer trust in our company and maximise potential future synergies through our deeper alliance."

The partnership is expected to improve profit margins and earnings per share in the next two years.

Meanwhile Toyota and Suzuki have announced that they have “agreed to start exploring ideas that are directed towards a business partnership.”   The focus will be on auto R & D,  R & D for advanced and future technologies and areas such as infrastructure development.

The two companies are expected to continue to compete with one another, but they will explore ideas which will allow them to respond to changes in order to survive.  Unlike the failed partership with Volkswagen, Suzuki's partnership with Toyota is more likely to succeed because the two companies have similar backgrounds.

Toyota sells more than 10 million cars every year. Suzuki, which sells more than two million cars is determined to continue to operate as an independent company.