Nissan’s credit was downgraded to “junk” stats by ratings firm Moody’s today; that is a bad thing. The company walked away from a deal with Honda, and now Nissan is essentially an orphan, alone in a cruel world. Will the Japanese automaker fall pray to an artful dodger or, perhaps, is there a Daddy Warbucks waiting in the wings?
The list of potential suitors for Nissan has grown and, as always, your Morning Dump correspondent refuses to cede to logic or probability. Instead, I think the most appropriate home for Nissan is with Apple. I will explain why and then you can tell me I’m full of crap. It’s fine. I’m used to it.
There’s no shame in being wrong sometimes, so long as you’re willing to learn from your mistakes. Volvo made a mistake when it stopped selling its wagons in the UK and now, thankfully, Volvo is admitting it was wrong. Ford also misunderstood the EV market and is working hard to correct its course.
It’s Friday, I was going to end on the news that Carvana had a bad quarter, but I think I should leave you all with some happy news.
Apple Is A Perfectly Imperfect Match For Nissan
The Nissan news is just getting wilder with every passing day. There have been so many twists and turns that I feel like it’s easiest just to bullet-point it:
- Nissan and partner Renault break up, with Renault saying it’ll eventually divest most of its shares in Nissan.
- Nissan, now just aligned with Mitsubishi, admits it’s in bad shape.
- Honda and Nissan announce a vague partnership.
- Taiwanese company Foxconn talks to Renault about buying its shares in Nissan. The Japanese government allegedly freaks out.
- Honda then announces it’ll merge with Nissan and Mitsubishi.
- Per reports, Nissan, unhappy with the terms, gets cold feet. Eventually, Honda also seems to get cold feet and pushes harsher terms on Nissan.
- Honda, it’s reported, maybe was more interested in Mitsubishi than Nissan.
- Foxconn says it just wants to “partner” with Nissan, not take it over.
Whew, ok. We’re sort of caught up. But wait, more stuff is happening!
First, the bad news for Nissan. Somewhat predictably, ratings agency Moody’s has taken a look at Nissan’s credit and decided that none of this is good. Here’s the latest report from The Wall Street Journal:
The ratings company said Friday that it downgraded Nissan’s senior unsecured rating by one notch to Ba1 from Baa3, the lowest investment grade. Moody’s maintained its negative rating outlook.
Moody’s said the rating action reflects Nissan’s weak profitability driven by slowing demand for its aging model portfolio. A slowdown has been evident in China, but now the carmaker faces challenges in the U.S. market as well, it said.
The ratings company said the negative outlook took into account the risks associated with implementing the carmaker’s new restructuring plan.
The lowering of its credit rating will make it harder for Nissan to borrow money at good terms, though the company has about $13 billion on hand and a little less in unused credit lines if it needs quick cash.
Foxconn, who accelerated all of this with its inquiry to Renault, is now saying it’s interested in a deal with Honda and Nissan according to Nikkei Asia:
Taiwan’s electronics manufacturer Foxconn has proposed forming a partnership with Japanese automaker Honda Motor, with the aim of creating a four-company framework for cooperation that would include Nissan Motor and its affiliate Mitsubishi Motors, according to a source familiar with the matter.
Foxconn had been seeking a partnership with Nissan to strengthen its electric vehicle business before Honda and Nissan announced they were looking at integrating their businesses. While those merger talks terminated last week, the two Japanese companies are expected to continue their business partnership.
Through partnering with Honda, Foxconn aims to form a broader framework for cooperation to compete with Tesla of the U.S. and Chinese EV makers.
There’s something for everyone in this deal, right? Honda gets access to Mitsubishi, Nissan gets a lifeline, and Foxconn gets a bunch of partners to help offset the growing threat of Tesla and Chinese companies like BYD and Xiaomi. It remains highly unclear if anyone would accept this deal, but it’s a fun thought.
Since Tesla was mentioned, I should probably mention that a group of Japanese business and political leaders are trying to push Tesla to buy the company. From Reuters:
The proposal, led by former Tesla board member Hiromichi Mizuno, is being supported by ex-premier Yoshihide Suga and his former aide Hiroto Izumi, the report said, citing unnamed sources.
The group is hopeful that Tesla will become a strategic investor, since they believe it is keen to acquire Nissan’s plants in the United States, according to the report.
Could Nissan’s facility pump out Cybercabs? Maybe!
All of those are potential outcomes, though I think a better outcome for Nissan is that Apple buys it. If you remember, Apple spent billions of dollars and maybe a decade trying to make a car before giving up. Building cars sucks. Instead, Apple has shifted to trying to expand its popular Car Play infotainemtn system deeper into cars.
Apple is flush with cash, holding onto roughly $50 billion with a market cap of about $3.7 trillion. It could easily afford to buy Renault’s shares or do some kind of other stock swap to make every current Nissan shareholder quite happy. There is no question of means here. Apple could do it.
And, unlike every other non-Foxconn suitor, Apple doesn’t have a competitive portfolio of cars to compete with the automaker. Nissan, for its part, lacks a competitive software offering in the automotive space and is behind on autonomy. Honda made a deal with Sony to create the Afeela, premised on the idea that the car is less important than the software. Apple clearly believes the same thing.
Why didn’t Sony just build its own car? Because, again, building cars sucks. Apple could support Nissan’s restructuring, simplify its operations, utilize Nissan’s ability to make cars (specifically EVs, a segment where Nissan was early with the Leaf, even it’s fallen a bit behind), take advantage of its huge industrial footprint, and offer the first cars Powered By Apple.
If you think about it, Apple isn’t really a manufacturer. It’s a tech, design, and marketing company. Apple’s most important product is the iPhone and it outsources its production to other companies. Specifically, it outsources the production to Foxconn!
I’m not crazy to suggest this, I promise. From that same Reuters story:
Nissan in recent weeks has been searching for a strategic partner in the tech industry, with some board members suggesting Tesla and Apple as ideal targets, the report said.
Think about it Tim Cook!
Volvo Admits It Shouldn’t Have Cut Britain Off From Its Vital Supply Of Estates
In spite of loving English literature (Graham Greene, Iris Murdoch, Evelyn Waugh, George Eliot), I’d never actually been to England until 2023. Then, in the span of about a year, I went to England three times!
It was great. I love English people. I love English brews. I especially love staring at all the cars we never got here in the United States. Wagons abounded, though the Brits call them “estates.” I noticed many Volvo estates, especially being used by the government as police/ems/fire vehicles. What I’d forgotten at the time was that Volvo was only selling estates to fleet users and not regular people.
Volvo! The wagon company! I’ve owned two Volvo wagons in my life and zero Volvo sedans or SUVs. Keeping wagons from Britain was a great mistake, as the company admits to Auto Express:
“When you tell a retail customer [estates] aren’t offered, they go off and buy someone else’s,” said Robert Deane, Volvo Car UK commercial operations director. Which meant a free hit for BMW, Audi, Mercedes and the UK’s biggest-selling car brand, Volkswagen, which registered 4,353 estates last year.
Volvo took the V60 and V90 (and S60 saloon) off the market in summer 2023, having seen demand dwindle to about five to 10 per cent of its total volume as more customers gravitated to SUVs.
Good on Volvo for fixing this oversight.
Ford’s Target Is BYD As Much As Tesla
It’s likely we’ll soon hear about a cheaper Tesla model, but, until one actually appears, it’s Chinese automaker BYD that is currently accepted as making the best affordable electric cars. In particular, the BYD Seagull offers about 250 miles of city range at a cost to consumers of under $10,000 in its home market. That is hard to beat.
With its Skunkworks project, Ford seems to consider BYD its target in terms of cost, according to comments from CEO Jim Farley in this Detroit Free Press report:
“We think that our battery strategy is more fit than our competitors,” Farley said at a Wall Street conference recently. “And we have understood BYDs through teardowns and future knowledge from the supply chain.”
[…]
In 2022, Ford established Skunkworks, where Farley said, “My badge does not work in that building,” alluding to the top-secret development happening there. He said Ford hired a whole new team in California, with many from competitive all-EV brands.
“They have developed a platform that we think is fully competitive with BYD,” Farley said.
What automakers learned was that merely catching up to Tesla is both difficult and expensive. Instead, Ford seems to be aiming at Tesla’s biggest competitor.
Check Out This Sweet Mitsuoka
It’s Friday! We survived most of the week and just have to make it through a few more hours to get to the weekend. Japanese car customizer Mitsuoka is now offering a new “Jade Green” color on its cars and celebrating the new shade with this gorgeous “Ryugi Wagon Adventure.”
It might look like a vintage Jaguar, but it’s actually a Toyota Corolla Fielder underneath.
Did I mention that the inside looks like they skinned a Teenage Mutant Ninja Turtle? I feel like that only adds to the charm.
When is Mitsuoka going to open up an arm in the United States?
What I’m Listening To While Writing TMD
Was “Hard Knock Life (Ghetto Anthem)” the first time you heard Jay-Z? The Annie-backed track was an unlikely hit and the video was basically on MTV nonstop back when that mattered.
The Big Question
Who should buy Nissan?
Who should buy Nissan?
Autovaz. Who wouldn’t want a Hardbody Niva Patrol?
That’s the least objectionable Mitsuoka I think I’ve ever seen. That’d be a fun daily driver.
Companies of the size and age of Nissan frequently develop an arrogance about how great they are. They see the buildings, people, machines, assembly lines, new cars and they think hey we are hot shit! They can’t see they are second placers. Mergers are always of not equals. The buyers want something the sellers have. Rarely is it administrators or managers or corporate culture. Technology, products, people, and facilities are the pieces the buyer expects from the seller. Last time I was bought, we were told it would work because of our common shared values. That was bullshit.
“Apple Is A Perfectly Imperfect Match For Nissan”
No. Nissan has too much legacy crap. Plus, I wouldn’t trust the top people they have there.
If I was Apple and wanted to get into the car business, I’d buy up the remains of either Canoo or buy the Fisker Ocean design and start from there.
Regarding Ford… I hope they come up with something great.
“Who should buy Nissan?”
Renault. Only this time, give all of Nissan’s upper management the boot.
Aside from Renault, some other company that has little or no geographic or product overlap. So maybe Tata or Mahindra & Mahindra.
Hell… I think GM might be a good company to buy Nissan. GM and Nissan only have overlap in North America. There isn’t much overlap anywhere else.
Though I suspect the culture clash between Nissan and GM would be even worse than Renault and Nissan.
I should buy Nissan. It’s out of my price range, probably shouldn’t be, though.
I really don’t see Apple buying Nissan. Sorry Hardigree, but I can’t see Apple wanting to swallow the whole elephant here. Yes, cars run software, and it’s increasingly become very complex and Apple would be well equipped to bring extreme process maturity in that space… but I struggle to see how or why they would think that building their own cars, even with all of Nissan’s engineering prowess could be an opportunity for them to turn them around.
If anything, I see Apple continuing to pursue becoming a Tier 1 technology (hardware and software) OEM provider, however, even that is an uphill battle as aside from CarPlay, which is largely just an extension of your iPhone running on the infotainment, they haven’t proved their mettle when it comes to the software needed for all the various automotive control systems and would likely have to continue to partner with all of the existing OEM tech providers for a good time to come.
While they have the means to acquire Nissan outright, is that something that their shareholders would vote to approve? One could argue that this question means Apple being Nissan’s savior here is unlikely to ever happen over fears that Apple might shift resources away from their already existing and very profitable product lines.
I find it quite interesting that Renault walked away over too many differences and Nissan seems quite stubborn. If Honda walked away from a potential merger too, that could mean that Nissan might not be worth saving and the company is ultimately liquidated while existing auto manufacturers and suppliers would be able to buy the pieces that they want for fire sale prices.
All this is to say that Nissan better get their shit together, realize that they are not in position to aggressively negotiate and do a deal before a liquidation occurs. Although that ship might have already sailed with Honda.
And finally, does anyone really want to drive the Max Pro trim level of the Kicks?
Kraft-Heinz should buy Nissan. Seriously, wait, hear me out…anybody? *crickets* anybody? Hellooo…aw fuggetaboutit.
Built in catsup dispensers in every new Nissan! Heck yes!
Finally a competitor to VW’s ketchup!
Apple should use Nissan to break into an existing market with groundbreaking new technology* and lots of marketing dollars just like it did with cellphones.
*The iPhone was not groundbreaking new technology
When the iPhone was announced in 2007, it most certainly was a groundbreaking product. When compared to other “smartphones” of the era, this was a pretty slick package. Compared to other entrants on the market at that time, most had smaller, inferior screens many of which were resistive if they supported touch at all and were covered in plastic. Also, most of the competitor phones had physical keyboards with difficult to use tiny keys, and if you had a slider phone you’ll know that the mechanicals wore out over time and were thicker than the iPhone and made them more bulky to store in say a jeans pocket. Those phones also didn’t typically have the after-sale support that apple provided including frequent OS updates to address critical bugs and bring new features.
Sure, there was alot of innovation taking place at the time, but apple simply made a phone that for the most part just worked well.
“Also, most of the competitor phones had physical keyboards with difficult to use tiny keys, and if you had a slider phone you’ll know that the mechanicals wore out over time and were thicker than the iPhone and made them more bulky to store in say a jeans pocket.”
I had a Droid 2. It were fine and I never had a problem with the keyboard, sliding mechanism or jeans pockets. Blackberry also had a huge following, some of whom still lament the loss of physical keyboards.
I’ve never owned an iPhone and still don’t. I do not find them particularly appealing especially after they axed swappable batteries and 3.5mm jacks.
Someone (Japanese, if the Japanese government has any say) is going to buy Nissan, the company, for less than a low mileage, unmodified, manual 240SX on Bring a Trailer.
At least here in the states, it seems to be FoxCONN based on Wisconsin and Ohio. I know they build the iPhone but I don’t trust them.
Goddamn is it rough for Nissan right now. And I know this is an enthusiast website where nearly 100% of us agree that Nissan is totally in the shitter, but I’ve noticed that the anti-Nissan sentiment has bled over even into the normies. I mean, lots of automakers have struggled with negative perceptions, but has a brand ever dealt with this level of disdain for their portfolio? Even at their worst, domestics were able to lean on trucks and other forms of brand heritage. What does Nissan offer to anyone at this point, over the competition? Does anyone have a positive story about a Nissan from the past 15 years?
If anyone was to buy Nissan, I’d imagine it would be someone on the level of Apple, who would then shoot their brand heritage and leadership into the sun. I don’t think anyone is willing to buy and use the brand at this point. Whoever would be purchasing would be stripping Nissan for parts.
Consumer sentiment has shifted due to these negative reports of Nissan. Would you buy a new car knowing full well that the warranty may not be honored if the company goes under? That’s a tough hill for any company to climb.
Nissan, for years, has been the laughingstock of car brands, even before the recent negative publicity.
Reports that the company is struggling doesn’t help. But neither does the exploding CVTs that they put in everything over the past 15 years. Or the subprime Altimas terrorizing the public. Or the not quite competitive lineup. Or the weird marketing.
Not everything! You can still get a Versa with a stick.
“Or the subprime Altimas terrorizing the public.”
I rented an Altima for a couple of weeks last summer. I found it quite nice. I very much appreciated the fantastic MPG (for a non hybrid) on regular gas, good handling, low NVH, decent power, nice styling in and out and level of features. I also have a LOT of respect for the level of safety in such an economy car. How many cars can be folded in half and crushed by a semi tractor yet it’s driver rescued with only minor injuries?
Mitsuoka? You all okay over there? This isn’t your typical flamboyant reinterpretation of historical vehicles. It’s, it’s……………kinda realistic. Okay, maybe the grille is a bit larger than on a real historical car, ya got me there. The rest of it, though, if someone happened to put a forward-facing hood ornament on top of that grille it could almost be mistaken for a much different estate. But way more likely to arrive on time instead of fashionably late. Just sayin’.
Nissan and its buyers now have the same credit score!
COTD
Agreed! Nothing else will come close.
I can’t picture Tesla doing anything other than building their own facilities new at this point… With the political climate Tesla can probably get their factories fully-subsidized by the public if it’s built in a red state.
On the other hand, buying some other brand names to hide behind could also be a good move for them
Apple has enough cash…. CASH….to buy BMW and almost enough to buy Mercedes. Why would they buy Nissan?
Because the Quandts would block them out at BMW, but that’s about it
My point was… Apple doesn’t need to settle for distressed-sale Nissan. They could afford to buy some of the highest end automakers with cash on hand. They have enough cash to buy Porsche twice.
That’s exactly right, if they want a car company, they can just go get a better car company
But, I also think Apple does not want to go back to owning and operating their own industrial facilities again, having switched totally to outsourcing many years ago. If they do go into the car business, they’ll develop the software in-house, pay some engineering consultancy to design everything else, then contract production to another automaker, I don’t think they actually want to go into building cars themselves. Slapping their name on cars and selling them, maybe
Apple is the IP. Period.
Isn’t that Magna-Steyr’s whole thing?
Yeah, and Valmet, and Karmann until they went bust in 2010, also AM General, until they lost their Mercedes contract
If Apple buys Nissan, do Apple fans then get to say that Steve Jobs invented the automobile? Is that dig just so 10 years ago?