May 7, 2021


every news you want

The Apple dilemma for the Japanese auto industry

3 min read

At the end of 2014, when Shinzo Abe, then Prime Minister, revealed in a speech saying that Apple was building its first technology hub in Japan, high-level foreign investment was touted as a success of its economic policy.

It also fueled immediate speculation that the iPhone maker may be looking for a Japanese partner for its secret project to build autonomous electric vehicles.

So it was only natural for the market scrutiny to come back to the eight Japanese automakers after the US tech giant. interrupted talks on an automotive merger with the South Korean Hyundai Motor and its subsidiary Kia.

In the last two weeks of financial results, nearly all Japanese automakers have been asked whether they have been approached by Apple about participating in its auto efforts. Responses from Mazda, Subaru, Nissan and Honda have ranged from “no comment” to a vague disposition to work with technology companies.

Apple’s search in Japan looks genuine, with Nissan briefly approached by the group in recent months. But, with conflicting visions of branding, the odds of an auto-manufacturing partnership between the two seem slim.

For Japanese automakers, Apple traffic is a double-edged sword. If the US group chooses a Japanese partner and its foray into the automotive industry is successful, the alliance could be a powerful force in the global shift towards zero-emission vehicles. On the other hand, a tie-up to build Apple-branded cars could demote Japanese manufacturers to what some outraged executives say is a supplier of “moving boxes.”

The Japanese electronics industry has faced a period of soul-searching after companies such as Sharp and Panasonic shifted from being the face of consumer products to a component supplier to Apple and Tesla.

But moving from a parts supplier to an assembler like Foxconn would take Japanese manufacturing to a whole new level. The psychological blow will be even greater for the auto industry, which accounts for 20% of the country’s exports – an even bigger contribution to the economy than that of German automakers, according to research firm Euromonitor.

In some ways, Apple’s interest is a testament to the quality of the country’s just-in-time manufacturing, well known to Apple through its existing relationships with over 900 suppliers in Japan.

From a US business perspective, the fragmentation of the Japanese auto industry is appealing, as smaller players will not be able to make the huge investments needed to switch to electric vehicles. Before the battery-powered car race had even started in earnest, the nation’s eight automakers combined are worth less than half of Tesla’s $ 750 billion market value.

So far, companies from Subaru, Suzuki Motor to Mazda have formed capital assets with industry leader Toyota, but such loose alliances will not be a permanent solution of survival. Faced with an uncertain future, some might be drawn to Apple’s capital and brand strength, which have the potential to mainstream electric vehicles.

In recent weeks, discussions of Apple’s interest have driven up shares of Nissan, its partner Mitsubishi Motors and Mazda. Investors have tended to focus on distressed companies that have strong technology and a strong presence in the United States, but weaker balance sheets and additional factory capacity due to weak sales. However, the gains have been short-term.

Not surprisingly, Toyota, the world’s largest automobile manufacturer by the number of vehicles sold, did not encounter any questions about Apple during its financial presentation.

Car makers around the world are already working closely with tech companies, with Google’s brother Waymo working with Jaguar, Volvo, Renault and Nissan. Toyota has also partnered with Aurora, the Amazon-backed startup, which recently acquired the autonomous driving unit from Uber.

Apple has always remained silent on its automotive ambitions and it is not known what exact conditions it is looking for with potential partners. As Ashwani Gupta, Chief Operating Officer of Nissan, recently said, existing ties with tech companies have involved tailoring their services to automaker’s products, but Apple may seek to reverse that relationship to tailor vehicles to its technology and services.

However, it is not easy for technology companies to immediately replicate the delivery of large volumes of high quality vehicles. To turn a tie-up with Apple into an opportunity, Japanese automakers would have to negotiate mercilessly while they still have a strong hand.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *