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Nissan Motor (TSE:7201) Could Be 20% Undervalued After Honda Software Partnership

Simply Wall St · 1d ago

Why the Honda partnership matters for Nissan Motor stock

Honda and Nissan Motor (TSE:7201) have agreed to jointly develop and standardize key electronic control units, in-vehicle operating systems, and software for next generation software defined vehicles planned from fiscal 2029.

This long dated project focuses on shared engineering and software platforms that both companies expect to use across future models. For investors in Nissan Motor stock, the agreement raises questions about capital allocation, potential cost efficiency, and how software capabilities might influence the company’s competitive position over time.

Nissan Motor shares trade at ¥316.6 after a 1 day share price gain of 0.51%, yet the share price return is down 7.10% over 30 days and 19.38% year to date. The 1 year total shareholder return has declined 10.36% and the 3 year total shareholder return is down 48.02%, pointing to weaker momentum that puts extra focus on whether the Honda partnership can shift how investors view the company’s future earnings power and risk profile.

Compare Nissan Motor’s software pivot with other potential opportunities by scanning our hand picked 55 AI infrastructure stocks, which could benefit from the same push toward connected, software driven transport.

Nissan Motor is pushing hard to prove the Honda software deal reflects a stronger business than recent share price performance suggests. The next step is to ask whether the stock reflects that reality or still prices in too much risk.

Most Popular Narrative: 20.3% Undervalued

The most followed valuation narrative puts Nissan Motor’s fair value at ¥397.29 compared with the current ¥316.6 share price. To see why, you need to look at the earnings and margin assumptions behind that gap.

Aggressive cost reduction initiatives under the Re:Nissan plan, including plant consolidation, fixed and variable cost savings, engineering process improvements, and supply chain optimization, are designed to significantly improve operating earnings and net margins, with tangible benefits expected from 2026 onward as restructuring milestones are completed. Deeper global partnerships and scaling via the Renault Mitsubishi alliance, along with ongoing collaborations with other automakers (e.g. Honda), are expected to yield further R&D and manufacturing efficiencies, shared platform utilization, and technology advancements, supporting long-term margin expansion through enhanced economies of scale.

Read the complete narrative.

Want to see what underpins that ¥397.29 figure for Nissan Motor? The narrative pulls together revenue growth, margin repair and a future earnings multiple that does not match current headlines. Curious which single profit bridge does most of the heavy lifting in that model? The full breakdown lays it out clearly.

Result: Fair Value of ¥397.29 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, the bullish Nissan Motor story still hinges on reversing losses and stabilising China, where weaker sales and ongoing price pressure could derail the turnaround.

Find out about the key risks to this Nissan Motor narrative.

Next Steps

If the mixed tone of this Nissan Motor story leaves you unsure, quickly review both sides of the debate through the 3 key rewards and 2 important warning signs.

Looking for more investment ideas beyond Nissan Motor?

If Nissan Motor has your attention, do not stop here. Broaden your watchlist with other stocks that could suit different goals and risk levels.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.