The deal would create an automotive giant with a production capacity of 7.4 million vehicles per year. A new automotive giant is about to be born. Honda and Nissan , Japan’s second and third largest car companies after Toyota, are said to be in talks for a merger that would create the world’s third largest automotive group in terms of vehicles sold. According to some press leaks, the deal could close as early as December 23 .
Honda-Nissan: A New Automotive Giant
The aim of the agreement is to bring together the two manufacturers into a single large group capable of competing against Tesla and the Chinese electric car manufacturers. A holding company, whose shares are yet to be defined, which could also be joined by Mitsubishi Motors (Nissan is the main shareholder with 24% of the shares).
According to Bloomberg , the merger would create a group with a market capitalization of 54 billion with a production capacity of 7.4 million vehicles per year (8.5 million including Mitsubishi), approaching the numbers of Toyota and Volkswagen .
The merger plan could also include Foxconn , a Taiwanese company that produces electrical and electronic components, which has announced its intention to buy Renault’s stake in Nissan. According to Nikkei , the head of the Taiwanese giant’s electric vehicle strategy has traveled to France to negotiate with Renault. An agreement that would allow the company to become a part of the new group by right.
According to Japanese newspaper Nikkei , the announcement of the agreement between Nissan and Honda could come as early as December 23. The agreement, if realized, would represent the largest merger since Fiat Chrysler and PSA, which in 2021 joined together to create Stellantis .
Competition from China
Last March, Honda and Nissan announced a strategic partnership to jointly develop electric vehicles and software technologies to optimize costs and strengthen their market position. In August, Mitsubishi Motors joined the partnership, expanding the development prospects.
Honda President Toshihiro Mibe clarified that, at least initially, the partnership did not involve mergers or acquisitions, but left open the possibility of future evolutions of the agreement.
Although the two companies achieved a combined sales volume of 7.4 million vehicles globally in 2023, they are facing increasingly fierce competition in the electric vehicle market . In particular, the Chinese market , which accounted for nearly 70% of global electric car registrations in November with more than 1.27 million units sold , has proven to be particularly difficult terrain.
China ‘s emergence as a global leader in electric vehicle production poses a threat to the competitiveness of the Japanese auto industry . Which employs about 5 percent of the country’s workforce . While a merger could help reduce production costs. Iis not enough to secure technological leadership in the rapidly evolving and heavily invested in R&D electric vehicle industry.https://youtu.be/BySU3GCtssk?si=ldJfS58MI8c97BJ6