Honda and Nissan in Merger Discussions
According to reports, Honda and Nissan have discussed the possibility of merging in order to better compete with EV manufacturers, especially in China.
The two Japanese automakers decided to look into a strategic alliance for EVs in March.
The companies gave the BBC the same responses, stating: “As announced in March of this year, Honda and Nissan are exploring various possibilities for future collaboration, leveraging each other’s strengths.”
It occurs as the industry transitions from gasoline and diesel automobiles to electric ones, with production in China booming, and many automakers struggle with increased competition.
After the story was initially published by the Nikkei, a Japanese business publication, Honda and Nissan stated that it was “not something that has been announced by either company” but did not deny it.
There is no assurance that a deal will be reached because the talks are still in their early phases.
“If there are any updates, we will inform our stakeholders at the appropriate time,” they stated.
According to Japanese TV channel TBS, the two businesses could formally acknowledge that they had held the conversations as early as next week.
According to a Bloomberg story, Foxconn approached Nissan about the iPhone manufacturer acquiring a majority share in the automaker. Nissan chose not to respond. A BBC request for comment was not immediately answered by Foxconn.
For a number of reasons, a possible merger between the top two and third-ranked automakers in Japan might be challenging.
Given the possibility of significant job losses, any agreement is likely to be subject to close political examination in Japan. Additionally, Nissan will probably have to end its partnership with French automaker Renault.
In March, Honda and Nissan decided to collaborate on their electric vehicle (EV) companies. In August, they strengthened their relationship by deciding to collaborate on batteries and other technologies.
The two businesses also announced an agreement to talk about electrification and intelligence with Mitsubishi Motors in August.
The Nikkei also reported that Nissan and Honda may eventually bring Mitsubishi into any potential partnership. The largest shareholder in Mitsubishi is Nissan.
On Wednesday, Nissan’s stock increased by over 23% in Tokyo. Mitsubishi’s stock increased by about 20%, while Honda’s dropped roughly 3%.
“The thought that some of these smaller players can survive and thrive is getting more challenging, especially when you add on the complexity of all the additional Chinese manufacturers who have come in and are competing quite strongly,” said Edmunds analyst Jessica Caldwell.
“It’s just sort of necessary to survive, not only to survive, but also just to afford the future.”
Honda and Nissan have been losing market share in China, which accounted for almost 70% of global EV sales in November.
The two brands had combined global sales of 7.4 million vehicles in 2023, but are struggling to compete with cheaper EV makers such as BYD, which has seen its quarterly revenues soar, beating Tesla’s for the first time in October.
Jesper Koll, from Japanese online trading platform operator Monex Group, questioned whether a merger could make the companies more competitive.
“Is this really just rearranging the deck chairs on the Titanic in the sense that neither Honda nor Nissan really have any products or any technologies that global consumers want?”
“From that perspective, it’s a nice rescue but it’s not creating a new national champion.”
