Breakingviews – Capital Calls: Mitsubishi reverses into France

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Mitsubishi Motors’ CEO Takao Kato and COO Ashwani Gupta pose next to the Mi-Tech concept car during the Tokyo Motor Show, in Tokyo, Japan October 23, 2019. REUTERS/Soe Zeya Tun – RC1C1EFD09F0

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PUSHED AROUND. Mitsubishi Motors may reverse its July decision to withdraw from Europe. Sources told The Financial Times that struggling alliance partners Renault and Nissan Motor leaned heavily on the group’s smallest member to let Renault build Mitsubishi models at its French factories – right after Nissan had refused to contemplate a similar idea from its Gallic partner and largest shareholder.

The move will preserve jobs at the French automaker’s underutilised, unionised production lines, but there is no commercial justification. Strategically, the alliance has been increasing regional specialisation. It made sense for Mitsubishi to leave Europe, where it has been losing money since 2018, so it can focus on Southeast Asia, where it generated 326 billion yen ($3 billion) in revenue in the first three quarters of its fiscal year – roughly twice its European sales. Once again, the dysfunctional alliance is being manipulated by French politics. Strong-arming the little guy is expedient, but in the long run ill-advised.

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