Having already gone through a bankruptcy scare in 1999, Nissan is back in crisis as it looks for an anchor investor to help it survive a pivotal year. This comes as longtime partner Renault is selling shares in the company, according to Financial Times.
The publication quoted two sources as saying that Nissan is on the hunt for a “long-term, steady shareholder such as a bank or insurance group” to replace some of Renault’s equity holding, while it finalises a new electric vehicle partnership with Honda it signed in March. “We have 12 or 14 months to survive,” said a senior official close to Nissan.
The company has reportedly stepped up partnership discussions with its cross-country rival on EVs and next-generation software-defined vehicles (SDVs) in response to stiff competition from Chinese rivals, as well as uncertainty in the US now that divisive former president Donald Trump has been reelected.
Nissan has apparently not ruled out having Honda buy some of its shares, with “all options” on the table on the back of declining sales in both China and the US. Financial Times also cited people close to Renault as saying that the French carmaker is willing to sell a portion of its Nissan shares to Honda as part of its alliance restructuring. One of those people added that a stronger relationship between the tow Japanese firms could “only be a positive” for Renault.
Both Nissan and Honda have downplayed the possibility of a capital tie-up since a deeper partnership on SDVs was announced in August, with one of the publication’s sources saying that Honda buying a stake remained a “last resort.”
The two companies declined to comment when reached by the publication, although Nissan added: “The partnership with Honda is strategically very important, and we hope to accelerate the realisation of the results of our activities through regular progress at the management level of both companies.”
A more immediate concern is the search for an anchor investor while it continues to bleed money. The turmoil has attracted investments from Singapore-based Effissimo Capital Management and Hong Kong’s Oasis Management, both of which have previously targeted firms like Toshiba and Nintendo.
News of the company in crisis comes just weeks after it reported a nine billion yen (RM262 million) loss, leading to it cutting some 9,000 jobs and scaling back global production by 20%. The company also admitted to misreading the growing demand for hybrid vehicles in the US and is now planning a series of key product launches in the coming months and years. “This is going to be tough. And in the end, we need Japan and the US to be generating cash,” said the aforementioned senior official.
Renault reduced its stake in Nissan last year amid infighting over unequal shareholding and voting rights – the company held 43% of Nissan while the latter owned only 15% of the French company and lacked voting rights.
A capital recalibration cut Renault’s stake in Nissan to just under 36%, which it has continued to whittle down; Nissan also gained voting rights for its stake in Renault. Nissan also holds a 34% stake in fellow alliance partner Mitsubishi – which is also involved in the partnership with Honda – but plans to divest up to 10% as part of its emergency turnaround measures.
Renault is not directly involved in talks with Nissan and Honda, but sources said it could be open to joining in response to Chinese competition. The company denied any discussions in a statement, however, saying only that it was supportive of a “potential win-win between Nissan and Honda.”
Sources also said the outcome of the Nissan-Honda partnership would present a test case for how smaller companies forging technology and regional partnerships could survive the industry upheaval, as opposed to mega-mergers like Stellantis. “Is bigger really better? Or is the partnership model better?” asked the senior official, adding that pursuing scale would lead to inefficiency after a certain point.
A partnership between all four companies would make sense, sources noted. While Honda and Nissan are both focused on their key Chinese, US and Japanese markets, adding Renault would bring Europe into the mix, while both Renault and Honda are drawn to Mitsubishi’s strength in Southeast Asia and its plug-in hybrid technology. For its part, Mitsubishi said “we are currently exploring all possibilities and are eager to co-operate in areas where we can leverage our strengths,” but added that nothing has been finalised yet.
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