TOKYO -- Nissan Motor's sale of a core subsidiary shows the extent to which CEO Carlos Ghosn is willing to dismantle the Japanese automaker's supplier network, taking a different path from rival Toyota Motor.
Nissan on Tuesday confirmed plans to sell its 41% stake in Calsonic Kansei to U.S. private equity firm Kohlberg Kravis Roberts, which intends to buy the rest of the parts maker as well through a tender offer next February. At an offer price of 1,860 yen per share, a full acquisition would cost 498.3 billion yen ($4.48 billion) and mark KKR's biggest purchase in Japan to date.
For Nissan, suppliers hardly come more central to its operations than Calsonic. It is both a behind-the-scenes player and a star in its own right, combining technical prowess as a high-volume supplier with an outward presence that fans of motor sports know.
But electric vehicles and other automotive innovations threaten to undermine Calsonic's value. The more battery-powered cars on the road, the smaller the markets for the heat exchangers and exhaust systems that have been the company's bread and butter. Numerous prospective buyers turned down Nissan's offer.
Even as it divests Calsonic, the automaker intends to strengthen its ties with Bosch, Continental and other so-called megasuppliers whose advanced technology could help it efficiently build competitive cars as the dawn of automated driving nears.
"The skill with which suppliers' potential can be tapped has a direct bearing on competitiveness," Nissan Co-CEO Hiroto Saikawa said.
Keeping it in the family -- except for sales
Calsonic owes more than 80% of annual sales to Nissan. By contrast, Toyota's core suppliers have more varied customer bases. Denso makes a majority of its sales outside the Toyota group.
Japan's leading automaker encourages such diversification as a way to enable its suppliers to earn more for investments in self-driving and other new technologies. Denso logged 4.52 trillion yen in sales last fiscal year against Calsonic's 1.05 trillion yen, and at 7%, Denso's operating profit margin was more than 3 percentage points wider.
While the Toyota group had its share of disagreement in the past, the automaker has in recent years made notable efforts to forge stronger relationships with suppliers. A training facility in Gamagori, south of Toyota City, provides opportunities for new executives at group members to learn about each other's company histories. Employees from Denso and two other key suppliers will form part of a new organization meant to spearhead the group's electric-vehicle development.
Nissan's decision to break up its keiretsu corporate family and open itself to a broad range of suppliers is more in line with the way of the automaking world outside Japan, as Ghosn can well see from his perch atop French ally Renault. An approach to production that emphasizes the use of modules -- large subassemblies provided by suppliers -- can help reduce costs. But standardization of components also holds the risk that every car turns out looking the same.
With the contrast between this Western approach to automaking and one that favors closer cooperation with group companies, the choice could make the difference as Nissan and Toyota seek to keep pace with innovation.
