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?
I first remember Jay-Z and Foxy Brown’s video Ain’t No Playa on Yo MTV Raps that I wasn’t allowed to watch at my grandma’s. Primary memory: Whoa! Lady Rapper! I like the way that guy laughs.
Carlos Ghosn should buy Nissan! What a comeback story – sell Amazon or Netflix the movie rights to finance the whole thing…
Wow. That’s actually brilliant!
It needs to be Amazon, for on-line car sales. More cross marketing opportunities.
You’re on to something here, Mr. Canoehead.
Crazier things have sort of almost happened, I mean, Lee Iacocca teamed up with Kirk Kerkorian to try and take back Chrysler in the ’90s.
Which had the unintended consequence of scaring Chrysler into selling themselves to Daimler-Benz
“When you tell a retail customer [estates] aren’t offered, they go off and buy someone else’s,”
Same could be said for sedans in the USA. If the Big 3 won’t offer them, there are still others that will and their customers will become former customers.
Why do you hate apple?
Apple is way too gaikokujin for the Japanese government.
And cars, especially Nissans, are way too low margin for Apple.
Maybe Nintendo can buy Nissan to get the GTR as a new Mario Kart option.
Who should buy Nissan? The same people who bought Studebaker in 1966. Nobody. Sell off the assets piecemeal.
Studebaker just merged with Wagner Electric and Worthington Corp to create Studebaker-Worthington Corp, which was eventually acquired by McGraw-Edison in 1979.
McGraw-Edison went on to be acquired by Cooper Industries in 1985, and Cooper got bought by Eaton in 2012, making Eaton Corporation Plc the successor to Studebaker. There’s been various divestitures and spin offs over the years, but Studebaker didn’t go out of business, didn’t break itself up, and didn’t liquidate, they merged into a bigger company, that stayed independent for over a decade, and then went through a series of acquisitions
You’re right, of course. But none of the successor companies made automobiles.
No, but they just shut down one division of many that they owned, and it wasn’t even a big division by 1966
Exactly. No one in their right mind should by Nissan. It’s dead, Jim.
The sovereign wealth fund of Saudi Arabia has seemingly infinity dollars. They should buy Nissan and move it to Neom- The Line City. It’s a whole liner city with no reason to exist. And what better mission to kick start your techno-futurist waste of resources, then reviving a Japanese legacy automaker? They could give all their fail-sons jobs designing crossovers or whatever. And the beauty of it all? Nothing the PIF invest in ever actually makes money. So no pressure there. Just pump out various Jukes, Kicks, Dives and the new Nissan Slide Tackle to your hearts content. It’ll still be a better investment the Newcastle United.
I think we need a Nissan-vention for Matt. He’s swiping right on any company for Nissan, just let it go. Any company that is looking to take them over, and that’s what it would be is a takeover, would need to deal with their management, which has made it clear from the Honda deal they still think they’re king spit. Honda didn’t need the deadweight, Apple certainly doesn’t need the headache, when they could partner with a number of Chinese makes if they wanted to.
The Nissan of the past is already dead, the leftover shell is what’s up for grabs and the only one that seems really interested is Foxconn, so I say let them have it, wouldn’t be worse than Volvo or Jaguar, which in my mind are a little more iconic than Nissan.
As long as we’re speculating and trying to make our wildest dreams come true, let’s pick the best possible buyer for Nissan:
Lego.
Hear me out. They are selling jagged bits of plastic that fit together at ludicrous prices. They’ve been around so long that most of the kids who played with Legos are now in high-paying jobs. It’s time for Lego to get its hands on some REAL scale. Gimme a Lego 360Z at 1:1 scale.
Please don’t ruin LEGO for me. LEGO is sacred, Nissan is the inverse.
Yes the “demand dwindle”, but is it still profitable or not? if you are selling less wagons and you still profit from that then what’s the problem? i guess they wish people will buy their SUVs but people bought a wagon from another company.
Thy typical finance response is that the capital used to make small margins should still be switched to where it can be used to make large margins.
You’re right, it’s the reason why we have less options when it comes to many things, like colors for example.
Why would Apple, Tesla, or Foxcon buy into Nissan knowing all the issues? That’s a massive footprint of issues they’d inherit. Tech companies don’t want that noise.
Nissan’s already shown they won’t change for the better. Even in the face of government pressure.
Would they not get a far better jumpoff point with a smaller automaker? Get the know-how of a car brand, a couple factories, and not enough inertial resistance to sweeping changes.
It needs to be a “buy”, not a “buy into”. Then replace the top management.
I think Honda is onto something in regards to not continuing negotiations unless or until the current CEO steps aside. He got them into the mess they’re in, and he’s insisting on retaining power. No venture capital-type investor would or should put up with that.
If we’ve learned anything lately, it’s that sweeping changes are possible (if brutal). The trick here is to take out the management and not the line workers, who aren’t responsible for Nissan’s mess.
Foxconn have partnered with Yulon to bring their Pininfarina-penned EVs to market. Yulon has historically been Nissan’s licensed local manufacturer for Taiwan. Thus, I doubt Foxconn is going it alone—no doubt Yulon is pulling a lot of strings since this would be a major boon for them to own their former ’employer’, but they would need Foxconn to bankroll it for them.
Berkshire Hathaway has $325+ billion in cash.
This is a drop in the bucket. They could also buy Honda and force the two together. It would fall into their consumable goods portfolio they prefer. They still hold $74 billion in Apple.
I don’t see the angle for Apple. Berkshire it possibly makes sense. They can do what others could not and force the management structures into place. The downside is they tend to not invest in non-American companies because they like to not change management structures.
Berkshire would also have a preferred position to strongly nudge Apple to integrate into the automotive space.
I doubt either would happen.
Berkshire did at one time have a large stake in BYD, I believe.
If only Nissan Computer legend, Uzi Nissan, was still alive to make the ultimate troll offer to buy a certain failing car maker that spent years suing him.
Building cars sucks? I disagree, i enjoy taking cars and doing things to them that makes them more to my taste. Oh wait yeah i wouldn’t want to be an auto manufacturer nowadays, everything is backwards, upside down and inside out.
I feel like he should have said, “Designing, sourcing, manufacturing and selling commercial quantities of the most complex, expensive piece of equipment most people will every buy is SO HARD.”
Although I guess that’s why I’m not a journalist …
As a longtime Apple user and Honda owner, I would rather Apple partner with Honda than the mess that is Nissan. My guess is that Honda looked closely under the hood at Nissan and noped right out of there for reasons we haven’t heard yet.
Did he cover the song that Dr. Evil and Mini-me did in prison?
That version was way better
That’s the first time I heard the song. We didn’t have cable and I was a sheltered kid from the suburbs.
If Apple gets into the car business, it will go (at best) about like their foray into the music business: big splash, disruption of the existing model, lots of stans proclaiming things like “this is the greatest thing ever” and “this is what Tesla should have done”, and then them ultimately backing away from it all when they realize they can’t completely take over that world and the margins aren’t high enough to be worthy of their time.
Does Apple have stans anymore?
I don’t recall any real excitement for any of their products in at least a decade.
There are still a few out there, but yeah, good point.
Most of them appear to have jumped on the Tesla (crazy) train, but a lot of those now appear to be ready to hop aboard something else.
The best thing about the past few years is that Apple products have just become another consumer product and not a pretentious lifestyle accessory.
It always unnerved me to deal with people who made consumer goods into a weird cult/religion thing. They’d look at me with their slightly glazed and not quite focused eyes while they passionately espoused the utter perfection of their particular product and company that could commit no fault. I would generally edge backwards from them during their spiel.
I like Mazdas and Hondas, but I don’t tie my whole identity around their brands. Ask me about Mazda corrosion problems, or Honda 5-speed automatic issues.
Sent from my iPad.
Brilliant.
As someone with a graphic design background and having used Apple products from way before they had stans (or anyone had stans I guess), they absolutely still have stans. It’s just the Tesla stans sort of redefined stanning and the Apple crowd is too cool and introverted to stan like stans stan now.
I still use their products, almost exclusively. But I work in a field where I’ve never used a PC/Windows computer in my professional life. I’ve tried, but I’m pretty much hard wired into the Apple ecosystem at this point and I can’t really deal with anything else so I just accept it.
I don’t think I’m a stan though. At least, since I really really hate the term and those that stan, I just hope not.
I always find this so interesting because the corporate environments I’ve worked in have been exclusively Windows and Apple has been so far out of the picture as to be a non factor.
Yet I’ve owned nothing but Iphones since 2008, often a couple at a time.
Funny how things work.
Every time there is some big company that needs (or wants) help Apple is mentioned.
There just aren’t that many pockets that are that deep so they look to Apple.
I don’t see it. If Apple wanted to get into cars again I don’t see it being the low margin, low quality brand like Nissan. People willing to pay a premium for their phone or laptop are not going to buy a Nissan.
However (BUT WAIT!), I do see a chance that Apple does want to try again at a car and I would then see them being willing to invest with Foxconn so it is more possible they are the pockets behind the Foxconn interest in this. Honestly, I am surprised Matt hasn’t suggested this as the drama and intrigue around such a deal would make it more fun to both write about and craft a new header image for the story.
Hard Knock Life is one of the best hip-hop songs ever.
Agreed on two fronts, that, and Apple should buy Nissan.
Apple has shifted to trying to expand its popular Car Play infotainemtn system deeper into cars
I for one am excited to see an infotainmountain in the Apple Fuji CUV
Seeing that our current Federal government wants to takeover Canada, Panama canal, USPS, Greenland, Washington DC, etc., etc. why not Nissan? Seems about right.
Who should buy Nissan? Mercedes-Benz Group AG
Ooh, yeah! They could call it a “merger of equals”.
Daimler-Nissan.
I see 13Bn reasons why MB should do this (again)
The Tesla-Nissan idea is interesting, given the current political trajectory of their CEO and the anti-EV rhetoric that was apparently quite popular in the last US election, diversifying with some ICE capability could help cushion them from major EV-specific market swings.
I think it would just result in two car brands that people would avoid. Tesla OGs don’t even want their cars any more, and the right still hates them save for a few weirdos in Cybertrucks. The Chebby/Ferd/RAMMmm crowd isn’t going to buy foreign cars just because Herr Musky owns it.
Yes that’s a risk, it really depends if he wants Tesla to succeed as a car company and quietly just buys Nissan for the powertrains and invests enough to let them do their cheap high volume car thing (most of the public won’t have a clue), but doing anything quietly with thin growth prospects and profit margins seems very un-Muskian. More likely he’s bored with cars and is going to try to turn it into an AI / robotics company to rule the world, maybe this ends with the Tesla automotive business getting sold off (insert shrugging emoji here)
Twitter would be a better choice to take over Nissan.
Their first joint model, the Nissan Bluebird.
Given that cars are dead and so is twitter, I’d sooner expect it to be the XTerra. Ugh, gonna go jump into a wood chipper now.
Ah Mitsuoka. They seem to epitomize “terrible idea, excellent execution”.
Apple just buying a car company instead of trying to build one from scratch makes perfect sense. The number of people swearing that a car without car play is a non starter means there must be some market for a pure Apple based car product. It would likely not be compatible with anyone elses charging systems though,
Apple has always seemed like a weird fit for a car company.
If anything, a tech firm with actual need for vehicles would make more sense.
-Amazon (50% of Nissan’s production becomes cargo vans, the other half comes with Prime day specials and ads to buy stuff on the screen)
-Uber
-Google for their self-driving efforts
I can’t really think of an existing automaker for whom Nissan’s product line of mediocre crossovers & sedans plus a small truck fills any gaps. Maybe Stellantis, at least in the US? But that seems a bit like tying two boat anchors together.
The Amazon idea is wild. Maybe a model more like the Kindle. Pay less to have ads running on the infotainment or pay more to have no ads. Kind of diabolical, tbh.
Do you want to distract Big Altima Energy drivers with Infotainment?
If Apple spent a billion trying to develop a vehicle, and then dropped the idea, it might be fair to assume Apple management concluded an Apple vehicle would not be profitable. Apple might surmise buying today’s equivalent of Studebaker Automobile Company would not be a profitable venture either. Apple has decades of engineering and manufacturing goods, but designing chips, phones and consumer computers on a global basis is quite different from constructing vehicles. Apple brings cash to the table, but its engineering skills do not transfer, IMHO.
I like the out-of-the-box Amazon idea. I think Amazon is too smart to invest its cash in a faltering legacy vehicle maker. Like Apple, Amazon engineers its chips and is excellent at global-scale servers. But I don’t see an engineering or production synergy here.
Uber is a meme stock, IMHO. Its product is a “platform” for leveraging other people’s assets and not creating hard goods. Its stock is on the rise over the last year, but again, all Uber brings to the table is cash.
Google is a sort of mash-up of Apple and Amazon in terms of engineering skill. I don’t see Google management looking at Nissan and thinking they have a bench full of engineers and managers who can fix a vehicle manufacturer.
If I’m correct in saying Nissan is today’s Studebaker Automobile Company, then is Stellantis Packard?
Apple is great at making assemblies that make a lot of money. What they don’t do is assemble their assemblies. I think that’s the idea, but, as we all know, assembling cars is REALLY hard.
Nah.
Two boat anchors is not the right analogy. That would imply that the problem will just sink quietly and quickly. The Stellantis/Nissan implosion will be far more entertaining and protracted.
More like dropping a boat anchor from above through the hull of a dangerously overloaded burning ship whilst said ship is still trying to load on more people.
Imagine a freeway of nothing but Nissan Altimas and Ram pickups trying to get somewhere as quickly as possible. Everyone dies, yes, but the chaos and carnage is far more entertaining then watching two anchors sink silently.
That Mitsuoka needs a front end that looks like the 1970s not the 1940s and then it would be good.
It looks like it was designed by AI. Do all of the wheels have the same number of lug nuts?