Japanese Automakers Honda and Nissan Poised to Merge
Merger Talks to Help Catch Up with Chinese Rivals and Tesla
TOKYO: Honda and Nissan were poised Monday to announce the start of talks on a merger to help the Japanese giants catch up with Chinese rivals and Tesla on electric vehicles.
Creating the World’s Third Largest Automaker
Their collaboration would create the world’s third largest automaker, expanding development of EVs and self-driving tech while coming to the rescue of struggling Nissan.
Details Remain Under Wraps
The pair have not released any details publicly but it was widely reported in Japanese media that they would sign a memorandum of understanding on Monday afternoon.
Aiming to Finalize Merger Deal by June 2025
Honda and Nissan — Japan’s number two and three automakers after Toyota — are aiming to finalize a merger deal in June 2025, several media outlets said.
Mitsubishi Motors to Join the New Holding Company
Mitsubishi Motors, which could join the new holding company early next year, is also expected to take part in Monday’s announcement, after Honda and Nissan hold board meetings.
Manufacturing Tie-Up a Possibility
Honda and Nissan’s partnership could include a manufacturing tie-up where they build vehicles at each other’s plants, Kyodo said, citing sources close to the matter.
Challenges Facing the Industry
Lacklustre consumer spending and stiff competition in several markets is making life hard for many automakers.
Chinese Rivals Leading the Way
Business has been especially tough for foreign brands in China, where electric vehicle manufacturers such as BYD are leading the way as demand grows for less polluting vehicles.
China Overtakes Japan as Biggest Vehicle Exporter
China overtook Japan as the biggest vehicle exporter last year, helped by government support for EVs.
Government Support for Strengthening Competitiveness
"We hope Japanese companies will take steps to respond to these changes and take measures to survive and win amid international competition," top government spokesman Yoshimasa Hayashi said Monday.
He declined to comment on the merger reports but highlighted the "importance of strengthening competitiveness in areas such as… batteries and in-vehicle software"
Nissan’s Struggles
Debt-laden Nissan last month announced thousands of job cuts as it reported a 93 percent plunge in first-half net profit, making a merger with Honda welcome news.
Foxconn’s Interest in Nissan
But Taiwanese electronics manufacturer Foxconn has also reportedly sensed an opportunity.
Foxconn’s Bid for Nissan
Foxconn, which builds devices for tech companies including Apple’s iPhones, first unsuccessfully approached Nissan with a bid to acquire a majority stake, according to Bloomberg.
Jun Seki’s Visit to France
Then a Taiwanese media outlet said Foxconn’s Jun Seki — a former Nissan executive — had visited France to ask Renault to sell its 35 percent share of Nissan, although reports later said this pursuit had been put on pause.
Partnership on Software and Components
Honda and Nissan had already agreed in March to explore a strategic partnership on software and components for EVs among other technologies.
Mitsubishi Motors Joins the Partnership
This partnership was joined in August by Mitsubishi Motors, of which Nissan is a majority shareholder.
Nissan’s Turbulent Decade
Nissan has weathered a turbulent decade, including the 2018 arrest of former boss Carlos Ghosn, who later jumped bail and fled Japan concealed in a music equipment box.
Honda’s Condition for Merger
Kyodo said that Honda would ask Nissan to achieve a "V-shaped recovery" in performance as a condition for the merger.
Conclusion
The proposed merger between Honda and Nissan, with Mitsubishi Motors potentially joining the new holding company, is a significant development in the automotive industry. The partnership aims to create a stronger competitor in the market, particularly in the electric vehicle segment, where Chinese rivals have been gaining ground.
FAQs
Q: What is the purpose of the proposed merger between Honda and Nissan?
A: The merger aims to create a stronger competitor in the market, particularly in the electric vehicle segment, where Chinese rivals have been gaining ground.
Q: What are the expected benefits of the merger?
A: The merger is expected to create a stronger competitor in the market, with expanded development of EVs and self-driving tech, and a more efficient use of resources.
Q: Will Mitsubishi Motors be joining the new holding company?
A: Yes, Mitsubishi Motors is expected to join the new holding company early next year, subject to the merger deal being finalized.
Q: What are the challenges facing the automotive industry?
A: The industry is facing challenges such as lacklustre consumer spending and stiff competition in several markets, as well as the need to adapt to changing consumer preferences and technological advancements.