With Honda out, who saves Nissan? Possibly a company that makes iPhones
The collapse of the proposed merger between Nissan and Honda opens the door for Foxconn to reenter the equation and resume its talks with Nissan. Foxconn, which among other things builds iPhones for Apple, has been looking at striking a deal with the embattled Japanese automaker for some time as part of its strategy to become a contract assembler of EVs worldwide. Sources in Japan say a potential deal with Foxconn enjoys much more support among Nissan board members than the merger with Honda.
It’s widely believed that Foxconn will look to acquire all or part of Renault’s 36 percent shareholding in Nissan, a legacy of the joint venture alliance agreement originally established in 1999 and restructured in 2023. Renault has previously said it wants to offload the 18.7 percent stake in Nissan currently held in a French trust. “We did have talks about acquiring a stake in [Nissan],” Foxconn chairman Young Liu told the "Financial Times." “If [taking a stake] is necessary for co-operation, we will consider it, but buying shares is not our main goal. Our main goal is co-operation.”
Urgency for Nissan
Nissan is in big trouble. Operating profit collapsed 90 percent in the six months to the end of September 2024, leading an unnamed senior executive to tell the "Financial Times" the company had just 12 to 14 months left to survive. Nissan stock slumped 6.3 percent in the immediate aftermath of the announcement that merger talks with Honda had been ended, and the company’s current market capitalization of $10.34 billion — roughly a quarter that of Honda’s — is 34 percent less than it was a year ago. It desperately needs a partner with deep pockets to help sort out the mess it’s in. Foxconn has deep pockets: It’s currently worth more than 10 times as much as Nissan.
Foxconn wants to be to carmakers what it already is to Apple and other consumer-electronics brands, a low-cost assembler of products for third party auto companies. In October 2024 it unveiled two EV "reference models," a minivan and a small bus, that join a lineup of six earlier designs, including a pickup truck called the Model V and a Pininfarina-styled crossover called the Model B, that automakers can pick from, fine-tune to their liking, and sell with their own badges attached.
Not that new to cars...
Though Foxconn has already enjoyed some success with its approach — its Model C crossover is already a best seller for Taiwanese automaker Luxgen — acquiring a stake in Nissan would potentially give Foxconn access to skills and technologies from an automaker with a global automotive design and manufacturing footprint.
Apple’s experience suggests the Foxconn contract manufacturing business model offers some compelling advantages for automakers competing in highly competitive low-margin, high-volume model segments. For example, both Ford and Apple maintain $40 billion or so in fixed assets and spend $8 billion to $10 billion a year on capital investments. Yet in 2023, Apple raked in more than twice Ford’s revenue and 23 times its net profit. But Foxconn’s cash may not solve Nissan’s existential crisis: “I hate to be critical of current management,” says a former senior Nissan insider, “but they've done nothing to define what the hell Nissan is and why it deserves to exist.”
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