×

Nissan CEO Carlos Ghosn plans deep dive to repair Mitsubishi's image

As the new chairman-elect of the Mitsubishi Motors board, Nissan's chairman and chief executive officer, Carlos Ghosn, has two priorities: Help the troubled Japanese carmaker regain consumer trust and return it to a growth path.

The turnaround effort will be led by Mitsubishi's chief executive officer, Osamu Masuko, and its employees, with support from Nissan, while Ghosn's role would be more of governance at the top.

"I will be responsible for the governance and making sure that there is a good mid-term plan [and] there is transparency into the company," Ghosn told CNBC's "Squawk Box" on Friday, adding there was a need to maintain Mitsubishi's identity as a company and its autonomy.

In response to a question, Ghosn hinted that there likely wouldn't be any sweeping job cuts or plant closures after Nissan completed the acquisition of a controlling 34 percent stake in the company on Thursday.

In turn, Mitsubishi will become part of the global alliance between Nissan and Renault. With combined vehicle sales of 10 million units in fiscal year 2016 - it will put the alliance among the world's top three automotive groups by volume.

Reuters said Nissan made a 237 billion yen ($2.29 billion) investment into Mitsubishi. As part of the investment, Nissan has nominated four representatives to the Mitsubishi board, including Ghosn.

Earlier this year, Mitsubishi admitted that it falsified fuel economy test data for its cars to make emissions levels look more favorable.

Carlos Ghosn, chairman and chief executive officer of Renault and Nissan Motor, left, shakes hands with Osamu Masuko, chairman and chief executive officer of Mitsubishi Motors, as they pose for a picture a during a news conference in Tokyo, Japan, on Thursday, Oct. 20, 2016.
Yuya Shino | Bloomberg | Getty Images
Carlos Ghosn, chairman and chief executive officer of Renault and Nissan Motor, left, shakes hands with Osamu Masuko, chairman and chief executive officer of Mitsubishi Motors, as they pose for a picture a during a news conference in Tokyo, Japan, on Thursday, Oct. 20, 2016.

The company said the test manipulation involved 625,000 vehicles produced since mid-2013, which included its eK mini-wagon, as well as 468,000 similar cars it made for Nissan.

It wasn't the first time the Japanese automaker was embroiled in a scandal. In 2000, Mitsubishi revealed it covered up safety records and customer complains. Four years later, it admitted to broader problems going back decades, leading to Japan's worst automotive recall scandal at that time.

Ghosn's strategy to address the damage from the current fuel economy charges was to go after the root causes. He said it was "too simplistic" to dismiss the problem as the work of a handful of "bad guys doing bad things."

He explained the root causes lay in the organization's process, mindset and was part of the corporate culture. That needed to be identified and changed quickly, he said.

"The fact that Mitsubishi had many problems like this in the past means that the management did not go to the root causes, did not understand exactly what was behind this kind of behavior and, in consequence, it repeated," Ghosn said.

"That's why I will be insisting to make sure that we go to the root causes of the problem and obviously bring significant solution in order for this to never repeat in the future."

Nissan and Mitsubishi would collaborate on purchasing decisions, localization and plant utilization. The two companies will also hare technologies and work to expand their presence in developed and emerging markets.

In a press release, Nissan said through the partnership with Mitsubishi, it would target synergy benefits worth 24 billion yen in fiscal 2017, which it expects to rise to 60 billion yen in fiscal 2018 and beyond.

"The synergies already identified are massive on the bottomline of Mitsubishi but also significant on the bottomline of Nissan," Ghosn told CNBC on Friday.

Investors cheered the move in the stock market, with Mitsubishi Motor shares up 2.61 percent and Nissan shares up 1.14 percent in mid-morning trade.

CNBC's Phillip Tutt contributed to this report.

Follow CNBC International on Twitter and Facebook.