Foxconn mulls Nissan investment as Honda, Nissan explore possible merger

  • Honda and Nissan are in advanced talks for a merger that could include the creation of a new joint holding company.
  • iPhone maker Foxconn has expressed interest in acquiring a stake in Nissan, accelerating negotiations between the automakers.
  • Renault, Nissan's majority shareholder, would support the merger if it strengthens the alliance with Mitsubishi.
  • The merger is intended to address challenges such as competition from Chinese manufacturers and the transition to electric vehicles.

new nissan logo

The Japanese automobile industry is experiencing a crucial moment with merger talks advanced between Honda Motor Co. y Nissan Motor Co., two of the most emblematic companies in the sector. The possible union seeks to strengthen its competitive position in a market increasingly dominated by electric vehicles and the rise of Chinese manufacturers such as BYD and global leaders such as Tesla.

Taiwanese manufacturer Foxconn, best known for producing Apple's popular iPhones, has also entered the scene by showing interest in acquiring a stake in Nissan. This move by Foxconn has added pressure in negotiations between the Japanese companies, which are concerned about the possibility of a foreign player taking control of a crucial part of their local industry.

What does the merger between Honda and Nissan propose?

Honda logo - Nissan logo - possible agreement

If an agreement is reached, both companies would work under a new joint holding company., a structure that would allow Honda and Nissan to operate in synergy without completely losing their independence. In addition, there is the possibility that Mitsubishi Motors, Nissan's partner in a historic alliance with Renault, also join this new entity. This integration would further consolidate the Japanese automotive industry, dividing it into two large groups: one led by Toyota and another by Honda, Nissan and possibly Mitsubishi.

One of the main challenges facing this possible merger is the Chinese market., the world's largest. Both Honda and Nissan have seen significant sales declines due to the growing popularity of local firms such as BYD and more economical and technologically advanced models. The merger of the two companies could help them address these challenges more efficiently, especially in the transition to electric and sustainable vehicles.

Foxconn and its interest in Nissan

Foxconn logo

Foxconn, formally known as Hon Hai Precision Industry Co., has set its sights on the automotive sector as a way to diversify its business beyond electronics. Its initial proposal is acquire a share package in Nissan, which would allow Foxconn to use the Japanese company's industrial resources and design expertise to manufacture electric vehicles on a large scale.

However, The possibility of Foxconn approaching Nissan motivated Honda and Nissan to accelerate their negotiationsBoth companies are seeking to prevent the entry of an external player that could destabilise the delicate balance of the Japanese automotive industry. In this context, Foxconn has chosen to put its intention to invest in Nissan on hold, pending the outcome of the talks between Honda and Nissan.

Renault's position and the future of the agreement

new logo renault

Renault, which owns 36% of Nissan, plays a crucial role in these negotiations. According to several sources close to the matter, the French firm would be willing to support the agreement as long as it strengthened the foundations of the alliance with Mitsubishi and reduced the costs. Nissan's financial problemsThe Japanese company has faced a series of recent challenges, including cutting its global production by 20% and eliminating 9,000 jobs.

On the other hand, Honda, with a market capitalization four times larger than Nissan, is in a stronger position to lead the negotiations. Industry analysts expect the company to play a dominant role in any future deal, which could involve difficult decisions such as possible job cuts in Japan.

Implications for the Japanese automotive industry

Nissan GT-R R32 EV Conversion

If the agreement materializes, The Japanese automobile sector would be dominated by two large conglomerates: the group led by Toyota and the other by Honda, Nissan and Mitsubishi. This new configuration would offer significant competitive advantages, allowing Japan to better compete globally, especially in key sectors such as electrification and autonomous driving technology.

In addition, The merger would allow the companies to share research and development costs., which could accelerate innovation in areas such as batteries and electric propulsion systems. It would also offer a more solid foundation to face current challenges such as pressure from Chinese brands and the entry of new players, such as Foxconn, seeking to position themselves in the automotive sector.

Honda-Nissan memorandum of understanding announcement could be made before the end of the year, according to local media reports including Nikkei and TBS. Although many details, including the shareholding distribution in the new joint entity, have yet to be worked out, market expectations are high.

While Foxconn continues to closely monitor the development of this possible merger, aware that its plan to enter the automotive sector depends largely on the decisions taken by Japanese companies. In any case, Foxconn's entry into the industry represents a paradigm shift, showing how the lines separating the technology and automotive industries are very blurred.

Source - Nikkei Asia

Images | Foxconn – Nissan – Renault – Honda


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