Nissan may bring in Honda as shareholder to save business

Against the backdrop of the geopolitical events of recent years and the rapid development of the Chinese auto industry, many classic automakers have found themselves in a crisis situation. Nissan Motor was among them, and while reviewing the structure of its alliance with Renault, it is now not against making Honda a strategic partner in terms of capital.

Image source: Honda Motor

As the Financial Times recalls, in August of this year, Nissan and Honda announced a strategic partnership in the development and production of vehicles, as well as software. At that time, assumptions about a closer partnership, which would be expressed in the exchange of shares, were decisively rejected, but recently the parties are no longer so categorical in this regard. At least, informed sources report that Nissan Motor has begun searching for long-term investors whose cash injections would allow the company to stay afloat in the next 12-14 months. The Japanese automaker is not opposed to using a bank or insurance group in this role, since Nissan is forced to compensate for the decline in Renault’s share in the capital structure of the alliance, of which Mitsubishi is a third member.

At the same time, the management of Nissan Motor does not exclude the sale of part of the shares of the first company to Honda. In addition, Renault is not against selling part of its shares to one of its alliance partners, and Honda or Nissan are the most likely candidates. The French company theoretically welcomes the idea of ​​strengthening the relationship between Nissan and Honda.

Image source: Financial times

Until recently, Renault owned 43% of Nissan shares, which had no voting rights and was content with only 15% of Renault shares. The restructuring reduced the share of the French automaker and the trust associated with it to 35%, and Nissan, although it retained the previous 15% of the shares of the French partner, received proportional voting rights. In addition, Renault can now vote only 15 percent of its Nissan shares, so the new management arrangement appears fairer.

Nissan solely owns 34% of the Japanese company Mitsubishi Motors, but intends to reduce this stake to 24% in order to raise money to maintain the viability of the business. Cooperation between Nissan and Honda does not yet imply any relationship at the capital level, but in light of the search for the first of the companies for a long-term investor, it cannot be excluded. Renault is not participating in the current negotiations, but has expressed its interest in cooperation with all three Japanese automakers. It would help optimize the costs associated with the development and release of new models on the European market, where the products of the Japanese members of the alliance are not so common.

Mitsubishi could benefit other alliance members with its hybrid powertrains and strong position in the Southeast Asian market. Company representatives added that they are considering all opportunities for cooperation with other automakers, provided that it will bring benefits and strengthen the strengths of the business.