Farewell To California: Mitsubishi Future Increasingly Uncertain As Renault-Nissan Alliance Teeters

Of the many unresolved complications burdening the troubled Renault-Nissan Alliance, the future of Mitsubishi Motors – the alliance’s most recent addition – is hardly the most consequential.

Except, of course, to Mitsubishi.

The Japanese automaker said this week that its U.S. operations will leave their home in Cypress, California south of Los Angeles and move to a suburb of Nashville, Tennessee. The advertised reason: to reduce costs by moving to a business-friendly, less expensive location.

Behind the move likely is another rationale: to move closer to Nissan’s U.S. base. Nissan, which bought a 34% stake in Mitsubishi in 2016, bringing into the global alliance with Renault, also moved to Nashville from California more than a decade earlier.

As Nissan and Renault struggle to reach agreement about how their partnership will be governed following the jailing in Japan and removal of Carlos Ghosn as its leader, Mitsubishi may have come to realize that as a less important alliance member it easily could get trampled in the conflict between its much larger partners.

“We have come to see issues with the alliance,” said chairman Osamu Masuko last week at Mitsubishi Motors’ annual shareholder meeting in Tokyo, as quoted in Automotive News. “Depending on how we manage the alliance, we might not be able to deliver the results we expect. That is the reality. So we need to strengthen ourselves.”

A company release said: “The move is part of an ongoing plan to reinvent every aspect of Mitsubishi Motors in the U.S., from corporate leadership to dealer partners to every touch-point in a customer’s relationship with their vehicle, and will sharpen the company’s focus on future growth and innovation.”

Masuko at the annual meeting said his company will coordinate more closely with Nissan on future direction, according to Automotive News, relying on Nissan’s superior resources in technology, purchasing, manufacturing and logistics.

Like other smaller automakers, Mitsubishi faces daunting regulatory changes in its key markets with respect to fuel efficiency and pollution control, as well as sweeping technological change as the industry gravitates toward autonomous and battery-powered vehicles. The cost of investing in these changes lies beyond the company’s financial wherewithal.

Mitsubishi’s history is a checkered one, replete with failed partnerships such as that with Chrysler in the last century — and with scandal: corporate coverups of vehicle defects and faulty fuel efficiency testing of its models, leading to the investment by Nissan.  Hurt by dwindling sales, the company closed its only U.S. manufacturing plant in Normal, Illinois in 2015.

One possible outcome of the corporate chaos among the alliance members would be the outright acquisition or absorption of Mitsubishi’s assets by Nissan, which would give the larger company a bit more scale.

By contrast, if reason and diplomacy eventually rule the day in the Nissan and Renault dustup – by no means a likelihood – Mitsubishi could gain a fresh lease on life with plenty of help from its larger alliance partners, and a new home in Tennessee.