Nissan Motor is on the lookout for a fresh collaboration as discussions to create a joint holding company with Honda Motor are set to be terminated, sources familiar with the situation revealed, according to Bloomberg citing a source requesting anonymity due to the confidential nature of the information.
The Japanese automaker is specifically eyeing a partner hailing from the US technology sector, as North America remains Nissan’s primary market, and the industry-wide shift towards electrification and automation drives car manufacturers to explore partnerships beyond their own sector.
Nissan’s stock witnessed a significant surge of up to 8.7% during early afternoon trading in Tokyo on Thursday, February 6. While Nissan declined to provide comments, mentioning that details regarding the talks with Honda would be disclosed around mid-February as scheduled, the carmakers have acknowledged ongoing discussions regarding various possibilities, including the potential termination of deal negotiations. It was revealed that Honda proposed acquiring Nissan and turning it into a subsidiary, a notion that faced strong opposition within Nissan’s ranks. Moreover, disagreements over the level of investment were also reported.
By opting to discontinue talks with Honda, both parties could walk away from the deal without incurring a hefty cancellation fee of 100 billion yen, as outlined in their memorandum of understanding dated December 23. Nissan’s board is urging CEO Makoto Uchida and other executives to devise a more comprehensive restructuring strategy whilst exploring potential partnerships, with a target date of February 13 to unveil a more profound overhaul coinciding with the quarterly results announcement.
The turmoil at Nissan escalated following the 2018 scandal involving former chairman Carlos Ghosn, resulting in a dated product portfolio and excessive production capacity. Nissan faced a financial crisis in November with a 94% dip in net income, prompting plans to downsize its workforce by 9,000 employees, reduce production capacity by 20%, and revise its yearly profit forecast by 70%. Analysts emphasize the necessity of additional restructuring actions to address Nissan’s ongoing challenges.
Hon Hai Precision Industry, also known as Foxconn, paused its interest in pursuing Nissan last year as the automaker engaged in discussions with Honda. Nevertheless, Foxconn remains observant, awaiting progress between the two companies before making its next move in the realm of electric vehicle outsourced manufacturing.
