Japanese automobile manufacturer Nissan (NSANY) has been cleared by China’s market regulator to create a joint venture partnership with Dongfeng Motor (DNFGF), one of China’s biggest state-owned automakers, Reuters reported.
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The update comes about a month after both firms disclosed plans to team up. Nissan China, the subsidiary that manages the carmaker’s investments and exports in the country, will hold 60% of the stake in the joint venture. The goal of the partnership is to foster the export of vehicles and auto parts.
Nissan Is in Survival Mode
The partnership comes at a time when Nissan China is struggling to survive in the face of intense competition from rival Chinese electric vehicle (EV) producers such as BYD (BYDDF) (BYDDY), Nio (NIO), and Li Auto (LI). In late April, Reuters reported that the automaker considered halting production at its 300,000-vehicle-capacity plant in Wuhan, one of China’s top industrial cities. Nissan leased the facility, where it manufactures the Ariya EV and X-Trail SUV models, from Dongfeng Motor.
At Nissan, things have been falling apart for a while. In February, the company shelved its merger talks with rival Japanese automaker Honda (HMC), ending months of efforts to strike a deal. The deal could have created the world’s third-largest automobile company by vehicle sales. Nissan also had to lay off thousands of its staff last year.
In its most recent financial year, the automaker recorded about $5 billion in net loss due to impairment. Impairment here means that the company lowered the value of some of its equipment and factories because their value had dropped.
In a bid to turn things around, Nissan earlier in March appointed a new CEO, Ivan Espinosa, who is betting on cost-cutting measures, such as closing down seven manufacturing plants and severing over 11,000 jobs.
Is NSANY Stock a Good Buy?
This week, Mercedes-Benz’s (MBGYY) pension trust offloaded its entire stake in Nissan for $325 million. Since the start of the year, Nissan’s stock has plummeted by over 25%. At the closing of trading on Thursday, the stock went down 0.85% to $4.64
Turning to Wall Street, on TipRanks, the company’s stock has no consensus ratings by Wall Street analysts. However, TipRanks’ AI Stock Analyst gives the share a Neutral rating with a price target of $4.50, which is a potential 3.02% downside.
