Top Japanese carmakers Nissan Motor and Honda Motor are reportedly exploring a blockbuster merger, which could create the world’s third-largest auto group by vehicle sales, with 8 million sales annually. The potential tie-up has sent shockwaves through the global automotive industry as both rivals seek to stay competitive on the road to full electrification.
The two companies plan to enter negotiations for a merger, with Japanese business newspaper Nikkei reporting that domestic peers are expected to sign a memorandum of understanding shortly. Nissan is the top shareholder in Mitsubishi Motors, which could be brought into the deal.
A megamerger would face several obstacles, including potential job cuts and political scrutiny in Japan. Analysts have expressed concerns about the likelihood of such a merger given the challenges faced by both companies.
Nissan has been struggling to compete with other automakers, particularly Tesla, while Honda previously forged a strategic partnership to collaborate on producing key components for electric vehicles. The reported merger comes at a time when many auto giants are facing increased global competition from bigger EV makers.
Industry experts believe that the deal could help Nissan and Honda pool their assets, save money on costs, and create the technologies they need for the future. However, they have also raised concerns about whether the companies have left it too late to compete in key markets.
Shares of Nissan soared nearly 24% on Wednesday, while Honda shares slipped over 3%. A potential merger would likely face several hurdles, including clarifying complex capital relationships and providing details on restructuring proposals.
The deal could be seen as a response to the full-scale transformation of the auto industry, with many analysts predicting that consolidation will become increasingly important in the coming years.
Source: https://www.cnbc.com/2024/12/18/what-a-potential-nissan-honda-merger-could-mean-for-the-auto-industry.html