Nissan Motor Co. is once again searching for a strategic partner after rejecting Honda’s proposed merger terms. The automaker, grappling with declining profits and workforce reductions, is now reportedly drawing renewed interest from Taiwanese electronics giant Foxconn.
Following reports of Foxconn’s potential involvement, Nissan’s stock surged by as much as 6%, while Honda’s shares rose over 8% after Nissan’s withdrawal from the merger. The failed negotiations could reshape the Japanese automotive industry and significantly impact Nissan’s future in the electric vehicle (EV) sector.
Merger Talks with Honda Break Down
In December, Nissan and Honda had announced plans to merge under a single holding company, a move that would have made them the world’s third-largest automaker alongside Mitsubishi Motors. However, insiders familiar with the discussions revealed that Honda’s revised terms would have placed Nissan in a subsidiary role rather than as an equal partner. This condition was deemed unacceptable by Nissan’s board, leading to the collapse of the negotiations.
The breakdown of talks has heightened concerns over Nissan’s long-term viability. Market reactions were swift, with Nissan’s shares falling nearly 5% amid uncertainty over its strategic direction. The automaker now faces mounting pressure to secure a new partnership to remain competitive in an evolving automotive landscape.
Foxconn Reenters Negotiations
With the Honda deal off the table, Nissan is actively exploring alternative partnerships, with Foxconn emerging as a potential collaborator. Hon Hai Precision Industry Co., widely known as Foxconn, had previously engaged in discussions with Nissan regarding an investment or acquisition. Although the talks stalled in December, the latest developments have prompted Foxconn’s leadership to renew its interest.
Foxconn Chairman Young Liu has reportedly instructed former Nissan executive Jun Seki to engage with Renault, Nissan’s largest shareholder, regarding a possible collaboration. This move signals Foxconn’s ambition to strengthen its foothold in the EV market, leveraging its expertise in electronics manufacturing for industry giants such as Apple and Sony.
Nissan’s Struggles and Uncertain Future
Nissan’s rejection of Honda’s terms comes at a time of significant financial distress. The company reported a 94% drop in net income for the first half of the fiscal year, prompting drastic cost-cutting measures, including the layoff of 9,000 employees and a 20% reduction in manufacturing capacity.
Additionally, Nissan has been steadily losing market share in key regions, including the United States and China. Without a strong strategic partner, the automaker risks falling further behind as the global automotive industry shifts toward electrification and autonomous technology.
A successful partnership with Foxconn could provide Nissan with much-needed financial stability and access to cutting-edge EV technology. However, securing such a deal remains uncertain, and Nissan faces a critical juncture in its efforts to regain competitiveness in the rapidly evolving market.
