LOS ANGELES — Mitsubishi Motors Corp.'s decision to move its North American headquarters from Southern California to a Nashville suburb to be closer to Nissan's U.S. outpost will help solidify their collaboration on product development, procurement, marketing and future projects.
But it's also symbolically important to junior partner Mitsubishi as it rebuilds its brand.
Tennessee is a growing titan in the auto industry.
The auto industry has a long history of investment in Tennessee, a growing hub for the sector. After Mitsubishi moves there, the state will be home to 2 Japanese automakers' North American headquarters and 3 auto assembly complexes. In addition, Tennessee has more than 900 suppliers, including key U.S. operations for Calsonic Kansei, Magneti Marelli, Denso, Bridgestone, Bodine Aluminum, Carlex Glass, M-Tek, Yorozu, JTEKT and Mahle.
1983: Nissan begins production at assembly plant in Smyrna.
1990: General Motors begins production at Saturn assembly plant in Spring Hill.
2005: Nissan announces it will move its North American headquarters to the Nashville suburb of Franklin from Southern California.
2007: Spring Hill begins retooling as Saturn production ends and GM ramps up to build the Chevrolet Traverse.
2008: Nissan's new North American headquarters opens.
2009: Following GM's bankruptcy reorganization, Spring Hill ceases vehicle assembly; powertrain and stamping continues.
2011: Volkswagen begins production at assembly plant in Chattanooga.
2012: GM resumes vehicle production at Spring Hill to meet growing demand for crossovers.
2019: Mitsubishi announces it will move its North American headquarters to Franklin, home of alliance partner Nissan.
The automaker said last week it will begin moving from Cypress, Calif., to Franklin, Tenn., in August and complete the move by the end of the year as part of its 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." The proximity to sibling company Nissan will also allow for cost savings, the company said.
Mitsubishi's move accelerates the integration of the two companies after the 2016 bailout of Mitsubishi by Nissan under former CEO Carlos Ghosn, whose ouster on financial misconduct allegations has shaken up the Renault-Nissan-Mitsubishi alliance.
"I think what's most important coming out of this is that Mitsubishi is just so happy to be part of the alliance, and I think they are trying to do everything they can to get the most out of it," said Stephanie Brinley, principal automotive analyst at IHS Markit. "There will be opportunities that haven't even been really mapped right now to have communications go a little bit faster, to find some shared programs they're not even really thinking about right now."
Renault does not hold a stake in Mitsubishi and does not sell vehicles in the U.S., making closer ties between the two Japanese automakers the next logical step ahead of shared product platforms. Mitsubishi dealers have said joint products such as the next-generation Outlander on a Nissan Rogue platform are critical to attracting new buyers to the Mitsubishi brand.
Still, Brinley said it's important for Mitsubishi to maintain its own identity, and the automaker said in last week's statement that it would set up shop separately from Nissan — initially in temporary office space as it looks for a permanent location. "Right now, Mitsubishi insists they're going to find their own building, so it's not necessarily a matter of, 'Uh, I'll take the east wing at Nissan North America,' " she said.
Since most product decisions are made in Japan, or at Mitsubishi's r&d center in Ann Arbor, Mich., which is staying put, the benefits of geographical proximity of the two brands will be concentrated on administrative and back-office areas, where Mitsubishi can take advantage of Nissan's much larger scale in the U.S.
"One of the examples that Mitsubishi has used from the beginning of the partnership is having the ability of stronger media buys by working with Nissan and Nissan's partners, and you can see that their advertising is deeper and stronger," Brinley said. "As things go forward, depending on what products are developed together and when, being physically closer can facilitate some of those discussions," she added. "But at the same time, a lot of the Mitsubishi vehicle decisions — as I understand it — are still made it Japan."
It's also unclear whether Nissan would manufacture any vehicles for Mitsubishi in the U.S. The Rogue is assembled at the company's Smyrna, Tenn., plant near its Franklin headquarters. Mitsubishi no longer has a vehicle assembly plant in the U.S.
More immediate concerns for Mitsubishi might be keeping valued employees during the move.
Mitsubishi said nearly 200 people work at its Cypress headquarters but that some of them would stay behind to represent its western region and parts operations. After Nissan announced in 2005 that it was moving its U.S. offices from Los Angeles to Franklin, more than half of its employees opted to stay behind.
Brinley noted that Nissan was going through a deeper reorganization at the time, and Mitsubishi has already done most of that. Mitsubishi said in the statement last week that 80 percent of its leadership team is new to the company or newly promoted.
Mitsubishi's decision to follow Nissan to Tennessee is yet another loss for Southern California, referred to in 2000 as Motown West for the concentration of automotive brands that based their U.S. operations there. Since then, the brands under Ford's former Premier Automotive Group — Lincoln, Jaguar, Land Rover and Volvo — moved back east, Suzuki stopped selling cars in the U.S., and Toyota moved to a huge campus in Plano, Texas.
Left in California are Honda, Mazda, Hyundai and Kia. However, fledgling Chinese brands such as GAC, Karma and Zotye have set up shop in the region.
Mitsubishi's U.S. revival is accelerating, with sales gains for the last six years straight, topping 100,000 vehicles in both 2017 and 2018. Sales through the first five months of this year are up 4.6 percent compared with the same period last year.
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