Honda and Nissan are considering a potential merger in response to pressure from Tesla and Chinese automakers.
The two largest automakers in Japan, Honda and Nissan, have initiated discussions to expand their collaboration, including the possibility of a merger. This was reported by Nikkei, noting that the decision is driven by increasing competition from Tesla and Chinese companies.
Main Areas of Cooperation
The companies are exploring ways to strengthen their technological partnership and reduce costs associated with the development of electric vehicles and software. Among the proposals are:
the establishment of a holding company to manage both corporations;
a complete merger of Honda and Nissan;
the inclusion of Mitsubishi Motors, in which Nissan holds a 24% stake.
Experts believe that this merger could create an alternative to the dominant Toyota and enhance Japan's position in the global market.
Market Reaction
The news led to a 22% increase in Nissan's shares and a 13% rise in Mitsubishi Motors' shares, while Honda’s shares fell by 2.3%. Honda's market capitalization stands at $44 billion, while Nissan's is at $10 billion. In the event of a merger, the companies could form a group comparable in scale to Toyota and Volkswagen.
Reasons for the Merger
The collaboration aims to tackle challenges that include:
a price war initiated by Tesla and pressure from the Chinese BYD;
increased costs related to the development of electric vehicles;
declining demand in Europe and the U.S.
Nissan is particularly in a tough situation, having recently cut 9,000 employees and reduced production capacity to save $2.6 billion.
Electrification Plans for Honda and Nissan
Honda aims to produce 2 million electric vehicles annually by 2030 and plans to completely phase out internal combustion engines by 2040. Nissan, known for its Leaf electric vehicle, plans to increase the share of electric and hybrid car sales to 60% by 2030.
Prospects and Challenges
A merger between Honda and Nissan could create the third-largest automotive group in the world; however, experts express doubts. Cultural differences, slow decision-making processes, and resistance within Honda may complicate the merger process. Experts emphasize that the companies need to act swiftly to respond to rapid market changes.
The outcome of the negotiations will be pivotal for the future of the Japanese automotive industry, which must adapt to new realities.