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Foxconn Open to Buying Stake in Nissan for Potential Cooperation

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Foxconn (2317.TW), Taiwan’s leading electronics manufacturer, has expressed interest in purchasing a stake in Nissan (7201.T), but emphasized that its primary goal is to collaborate rather than invest in the automaker. Chairman Young Liu stated on Wednesday that Foxconn would consider buying shares if cooperation with Nissan required it, but reiterated that acquiring shares was not their main focus.

Foxconn is in discussions with Renault (RENA.PA), Nissan’s largest shareholder, about potential collaboration. These comments come amid uncertainty surrounding Nissan’s future after it stepped away from merger talks with rival Honda (7267.T), which would have created the world’s fourth-largest automaker.

Sources have indicated that Nissan and Honda, who had been exploring a merger, are expected to announce the end of their talks on Thursday due to growing differences between the two companies. This deal would have been a significant shift in an automotive industry facing mounting pressure from electric vehicle (EV) manufacturers, particularly China’s BYD (002594.SZ).

In light of the changing landscape, Nissan is reportedly open to partnerships with new players, including Foxconn, which is best known for its role as Apple’s primary iPhone manufacturer. While Foxconn seeks to diversify its business, it is not looking to establish itself as an automotive brand. Instead, it intends to offer commissioned design and manufacturing services for electric vehicles.

Neither Nissan nor Renault has commented on Foxconn’s chairman’s statements regarding potential collaboration.

Honda and Nissan Set to Merge in 2026 as Negotiations Begin: Reports

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Honda Motor and Nissan Motor are in the early stages of finalizing a merger agreement, with talks expected to gain momentum in the coming weeks. According to reports from Japanese media, the two automakers are aiming to combine their operations by 2026. The merger would see the creation of a holding company, led by a president appointed by Honda. Negotiations between the two companies are set to begin later this week, and both automakers are anticipated to hold a press conference on Monday to provide further details after their respective board meetings.

On Monday morning, executives from Honda, Nissan, and Mitsubishi Motor Corp., Nissan’s junior partner, were spotted entering and leaving Japan’s transportation ministry. It is believed that they were there to inform officials about the launch of formal merger talks. However, when approached for comments, the executives remained tight-lipped, and spokespeople for both Honda and Nissan also declined to offer any immediate statements.

Reports suggest that the merger, which could see Nissan and Honda pool their resources in the face of growing competition in the global automotive market, is set to be officially finalized by 2026. According to the Yomiuri newspaper, the holding company resulting from the merger would be listed on the stock market, with Nissan’s shares experiencing a decline of up to 2.6% following the news. In contrast, Honda’s stock saw a slight increase of 2.1%. However, both companies have experienced significant declines in their stock prices over the course of the year, with Nissan’s share value dropping around 21%, and Honda’s down by 14.4% since January.

Both Honda and Nissan are grappling with serious challenges in an increasingly competitive market, particularly from the rapid rise of electric and hybrid vehicles produced by Chinese manufacturers. In response to these pressures, the two companies are exploring a merger as a means of strengthening their position in the automotive industry by pooling resources, sharing technology, and collaborating on research and development. This strategic move could help both companies better compete with newer entrants in the electric vehicle market while mitigating the financial strain they are currently experiencing.

Carlos Ghosn Warns of “Carnage” for Nissan in Honda Merger

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Carlos Ghosn, the former CEO of Nissan, has raised concerns about the potential consequences of a merger between Nissan and Honda, predicting that Nissan would bear the brunt of the cost-cutting measures. In an interview with CNBC, Ghosn expressed his belief that Honda would take control in the merger, which he described as “sad” considering his long tenure at Nissan. He emphasized that there is little complementarity between the two automakers, and any synergies would likely come through cost reductions and duplication of plans and technologies, which would harm Nissan, the “minor partner.”

Ghosn, who led Nissan for 19 years and was instrumental in its growth, criticized the lack of alignment between Nissan and Honda, suggesting that the merger would lead to significant layoffs and operational cuts at Nissan. He also pointed out that Nissan’s former partnership with Renault offered more complementarities, implying that the Nissan-Honda merger was not as strategically sound.

The merger speculation gained traction earlier this month, and both companies confirmed their talks on Monday. The proposed merger would result in a $54 billion entity, with Honda assuming the dominant role due to its significantly larger market capitalization. If successful, the combined group would become the world’s third-largest automaker, surpassing Hyundai. However, both Nissan and Honda executives have stressed that the merger would create economies of scale, particularly in the electric vehicle (EV) transition, and deliver long-term profitability.

Despite these assurances, concerns remain about the merger’s viability. Nissan is undergoing a major restructuring, which includes cutting production capacity and laying off 9,000 employees, while Honda’s CEO acknowledged that some shareholders may see the deal as a form of support for Nissan’s struggles. Ghosn suggested that Nissan’s move towards the merger indicated a sense of desperation, as the company appears unable to resolve its issues independently.

Investor reactions have mirrored these concerns. Kei Okamura, a portfolio manager at Neuberger Berman, noted that while the merger’s long-term vision seems promising, the integration process would be crucial to its success. He emphasized the uncertainty around the merger’s execution, particularly the challenges of integrating the companies’ assets, cultures, and people. Okamura also noted that the deal could fall through if Nissan’s restructuring efforts fail to yield results.

Both Nissan and Honda have declined further comment on Ghosn’s statements or the merger plans.