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The Nissan PH unification: takeover, merger or joint venture?

The Nissan PH unification: takeover, merger or joint venture? image

Text: Brent Co / Photos: | posted July 29, 2013 12:31

Nissan brand in the Philippines to be unified, but how?

The two Nissan manufacturers and distributors in the Philippines, Nissan Motors Philippines, Inc. (NMPI) and Universal Motors Corporation (UMC), have certainly been the talk of the automotive industry for the past few weeks.

Initial reports spoke of a possible unification of Nissan's operations in the Philippines by merging NMPI and UMC under the initiative of Nissan Motor Company Limited (NML) to form a new company.

According to two independent sources, this information regarding a merger is inaccurate due to the fact that NML only has an ownership stake in NMPI (10 or 13%) and none in UMC, making a proper merger quite unlikely.

Instead, our sources point to a complete takeover of NMPI. The takeover will be via NML's complete purchase of NMPI from Taiwanese partner Yulon Motor. The new operation will reportedly be supervised by Nissan's Bangkok-based regional office which is responsible for the Philippine market: Nissan Motor Asia Pacific (NMAP).

The proposed name for the 'new Nissan': the Nissan Motor Sales Company.

In detailed, separate conversations with our sources, it was relayed to us that NMAP is picking within the current marketing & sales and dealer teams of both NMPI and UMC as well as going through several very qualified candidates for executive posts. With the reported takeover, combining personnel in marketing and distribution groups of both companies is being done to create redundancies. It was also said that the new company will set up office at Bonifacio Global City for marketing, sales and dealer operations.

Reports indicate that the new operation will retain manufacturing and assembly in the Philippines through the current NMPI plant. It is unclear whether UMC’s Star Motor Manufacturing plant will be involved.

Recent rumors of the merger came about when NML wrote an email to Philippine Nissan dealers stating “the company will take a more proactive presence in the market” and will be improving its current vehicle lineup by introducing new models.

News of a Nissan unification in the Philippines is not new, and typically surfaces every 3 years or so. 

In contrast, NML also promised Yulon in 1996 that it would cut off ties with UMC if the Taiwanese takes over local distributorship. This was made after NML CEO Carlos Ghosn visited the Philippines as part of the company’s global operations realignment. After NMPI was formed, UMC still remained as Nissan’s commercial vehicle assembler and distributor, thus creating a rift for more than 20 years.

With our sources pointing to NMPI being taken over by NML to form the Nissan Motor Sales Company, what about UMC? The company is reportedly in negotiations with Tata to acquire distributorship and local assembly. The company currently distributes Ashok-Leyland trucks, a joint venture of Renault-Nissan and Leyland in India.

Given the sensitive nature of the information given to us, we conferred with Lee Junia, NMPI's Vice President for Marketing, Sales and After Sales as to the validity of the reports. He admitted that details are still unclear, as “negotiations are being kept at the highest levels” (read: principals only) but agreed that the merger seemed improbable (given the lack of an NML stake in UMC) and there's a slightly better possibility of a takeover. The executive also pointed out that there is a third possible avenue of approach: a joint venture corporation.

“As to what the new entity and timeline will be, we still don't know,” said Lee Junia, NMPI VP for Marketing, Sales and After Sales. “What I can say is that our customers and our employees have nothing to fear because however this turns out, a new unified entity can only be better for the Nissan brand in the Philippines