Car navigation specialist Pioneer Corporation has asked Honda for several billion yen of investment to boost its thinning capital base, sources have told Japanese media.
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The company hopes to secure additional funds from Honda, which is believed to be open to the request, as a supplement to the state-sponsored corporate revitalisation programme Pioneer plans to apply for, the sources told Kyodo News.
“We have consulted (with Honda) on what cooperation we could get to enhance our financial base,” Pioneer spokesman Akio Ohmachi told AFP, adding that nothing definite had been decided.
As part of its restructuring measures, Pioneer has announced its withdrawal from the loss-making flat-panel television business and will instead focus on the car navigation business for which it accounts for about 30% in Japan. It was once known for its top quality home hi-fi components and car audio.
Pioneer hopes to turn itself around by strengthening its relationship with key automakers like Honda and focusing on auto rather than consumer electronics.
Honda is believed to be finalising details of the form and amount of its investment in Pioneer since it would face trouble securing auto equipment like car navigation systems if the electronics maker falls into further financial difficulty, Kyodo said.
Pioneer expects to a record-high group net loss of JPY130bn for fiscal year 2008/9 ended 31 March.
Sources had earlier told Kyodo it plans to file for tens of billions of yen in government-guaranteed capital investment from the Development Bank of Japan.
If Honda decides to acquire common stock of Pioneer, the automaker could become a major shareholder with an interest of around five percent, the Nikkei business newspaper said.
Rival electronics giant Sharp is currently Pioneer’s top shareholder with a 14.3% stake, the paper said.
Investing in Pioneer could give Honda an opportunity to develop new services that use its technology, the Nikkei added.
