Nissan is facing a precarious financial situation, with reports indicating that the automaker has ’12 or 14 months to survive’ unless it secures a stable long-term shareholder. The Financial Times highlighted that Nissan is urgently seeking a partner, particularly as its alliance partner Renault plans to decrease its stake in the company.
In recent developments, a senior official from Nissan revealed to the publication that the company has not dismissed the possibility of Honda, with which it announced a partnership in August, purchasing some of its shares. A source close to Renault expressed that a stronger collaboration between the two Japanese manufacturers could be beneficial, and noted that Renault is open to selling a portion of its shares to Honda.
Renault has already reduced its holding in Nissan from 43.4% to below 36% over the past year, maintaining a 15% voting stake while confirming intentions for gradual stake reduction. Concurrently, Nissan has gained voting rights for its 15% stake in Renault and plans to cut its stake in Mitsubishi from 34% to 24%.
The challenges Nissan faces are significant, with sales in the crucial US market plummeting, alongside a slowdown in sales in China. To combat declining global sales, Nissan is advancing the rollout of new energy vehicles, including hybrids and electric models in China, and plug-in hybrids in the US.
Earlier this month, Nissan announced plans to cut global production capacity by 20% and lay off 9,000 employees to stabilise and restructure its business after experiencing a significant drop in operating profit. The company’s operating profit for the first half of the Japanese fiscal year 2024 fell to just 32.9 billion yen, marking a stark decline from 303.8 billion yen.
Despite these tough measures, Nissan’s CEO Makoto Uchida assured that the company is not shrinking but rather restructuring to become more resilient and responsive to market changes. Uchida also announced he would voluntarily take a 50% pay cut, a move mirrored by other executive committee members.
Nissan is committed to continuing its collaboration with Renault while also focusing on its new partnership with Honda. This partnership aims to explore synergies and opportunities in the electrification of vehicles and the development of a next-generation software-defined vehicle platform. The companies are also set to collaborate on sharing electric motors, inverters, and battery technologies.
Japan’s Ministry of Economy, Trade and Industry has long envisioned a merger or partnership between Honda and Nissan, but Honda’s desire for independence and Renault’s controlling stake in Nissan complicate these aspirations. Since forming their alliance in 1999, Nissan and Renault’s relationship has been tumultuous, particularly following the controversial ousting of former CEO Carlos Ghosn in 2018. As tensions have escalated, suspicions regarding potential mergers have lingered, creating uncertainty in the future of these automotive giants.
