Honda Motor Co., Ltd. and Nissan Motor Co., Ltd., Japan’s second- and third-largest automakers, are discussing ways to deepen their ties, including the possibility of a merger that could fundamentally restructure Japan’s car industry.
The talks between the two Japanese giants highlight the intense upheaval within the world’s auto industry, as carmakers grapple with expensive technological shifts, political instability, and the rise of fast-growing Chinese rivals. Combining forces could provide Honda and Nissan with the resources and scale needed to navigate these immense pressures.
Honda sold 3.98 million vehicles last year, while Nissan sold 3.37 million. Their combined efforts could make them the world’s third-largest automaker group, behind Toyota Group and Volkswagen Group of Germany.
The companies began collaborating on electric vehicle development this year and have expanded discussions to include creating a new company under which both automakers would operate. A memorandum of understanding is expected to be signed within the next week to formally begin discussions on partnership-broadening steps, including merger details.
A potential partnership could benefit both companies in several ways. Honda has a strong portfolio of fuel-efficient hybrid vehicles, while Nissan can help build out its global battery supply chain. Nissan also holds a large stake in Mitsubishi Motors and may consider joining a merged entity.
However, automotive mergers often fail to deliver the efficiencies and profits expected by executives. Previous examples include DaimlerChrysler and Stellantis, which have faced challenges in achieving growth and profitability levels.
The talks between Honda and Nissan come as Japanese automakers face intense competition from new, highly cost-competitive rivals in China. Chinese makers of electric vehicles like BYD are pushing deeper into Europe and Southeast Asia, where Japanese manufacturers have long dominated.
Industry experts say that moving forward in electric vehicles is expensive and requires significant investment. With sales of electric vehicles growing more slowly than expected, smaller players need to find ways to pay for it. A potential partnership between Honda and Nissan could help both companies navigate this challenging landscape.
Source: https://www.nytimes.com/2024/12/17/business/honda-nissan-talks-merger.html