Nissan is in dire financial straits, with its operating profit plummeting by 90% over six months in 2024. A senior executive warns of a looming financial collapse within 12 to 14 months. Following halted merger talks with Honda, Nissan saw its stock drop by 6.3%, with a market cap of just $10.34 billion—a mere quarter of Honda's and down 34% from last year. Nissan crucially needs a financial ally, and Foxconn has the resources, being valued at more than 10 times Nissan's worth.
Foxconn aspires to transform the automotive manufacturing sector just as it did with consumer electronics, aiming to become a low-cost assembler for car manufacturers. In October 2024, it introduced two new EV models to its lineup, offering automakers customizable designs that they can brand as their own.
Already successful with the Model C for Luxgen, acquiring a stake in Nissan could provide Foxconn access to global automotive expertise. The Foxconn model mirrors Apple’s, showing profitable potential in cutthroat sectors. For instance, Apple vastly outperforms Ford financially while maintaining similar asset and investment levels.
Though Foxconn's financial strength is significant, it might not address Nissan's core issues. A former Nissan executive criticizes the current management’s failure to define the brand’s identity and market relevance, casting doubt on the future.
Summary: With Nissan facing critical financial issues, Foxconn emerges as a potential savior. While discussions of stake acquisition highlight the company's ability to assist, questions remain about whether Foxconn's involvement can address deeper operational challenges at Nissan.
