Nissan is facing a critical financial situation, reminiscent of challenges from the 1990s, as reported by The Financial Times. The company is actively seeking a reliable long-term shareholder, potentially a bank or an insurance group, due to Alliance partner Renault’s plans to decrease its stake. A senior official from Nissan has stated, ‘We have 12 or 14 months to survive.’ In an intriguing development, Nissan has not dismissed the possibility of Honda, with which it formed a partnership in August, purchasing some of its shares.
Recently, Renault reduced its holding in Nissan from 43.4% to below 36%, while still maintaining a 15% voting stake. The French carmaker has indicated it intends to continue reducing its stake progressively. Meanwhile, Nissan has also seen a reduction in its stake in Mitsubishi from 34% to 24%.
The financial strain is palpable, with Nissan reporting a significant drop in sales in the crucial US market, along with a decline in China. In response to these challenges, the automaker is accelerating the launch of new energy vehicles, including hybrids and electric models in China, as well as plug-in hybrids and e-Power hybrids in the US.
Earlier this month, Nissan announced plans to cut global production capacity by 20% and lay off 9,000 employees to stabilize its operations. The company’s consolidated operating profit for the first half of the Japanese fiscal year 2024 plummeted from 303.8 billion yen (approximately A$3 billion) to just 32.9 billion yen (around A$334 million), resulting in a mere 0.5% profit margin.
CEO Makoto Uchida emphasized that these restructuring measures are not indicative of a declining company, but rather a necessary step to become more agile and resilient in the face of changing market conditions. Uchida has also voluntarily agreed to a 50% pay cut, joining other executive committee members in this decision.
Despite these challenges, Nissan has expressed its intention to maintain collaboration with Renault while also signing a memorandum of understanding with Honda and Mitsubishi aimed at discussing frameworks for further advancements in automotive intelligence and electrification. This partnership could lead to shared platforms and development of next-generation software-defined vehicles, electric motors, and battery technologies.
Japan’s Ministry of Economy, Trade and Industry has long envisioned a merger between Honda and Nissan, but Honda’s desire for independence and Renault’s controlling stake in Nissan have hindered such a move. The Renault-Nissan Alliance originated in 1999, when Renault acquired a significant stake in Nissan, helping it recover from bankruptcy. Over the years, however, the relationship has been fraught with tension, especially following the termination of former Nissan CEO Carlos Ghosn in 2018 over alleged financial misconduct. Now, as both companies navigate these turbulent waters, the future remains uncertain.
