Japan’s struggling automakers Honda Motor Co. and Nissan Motor Co., have announced a potential merger that could give them the scale needed to compete with China’s BYD Co. The plan, which amounts to an acquisition of Nissan by Honda, has been met with skepticism, but recent sales figures suggest it could be just what the duo need.
Honda sold 3.43 million cars globally in the first 11 months of 2024, while Nissan struggled to reach 3 million units. In contrast, China’s BYD Co. sold 3.76 million vehicles over the same period, highlighting the weakness of Honda and Nissan alone. The merger could give them a fighting chance against BYD.
Both Honda and Nissan have been struggling to compete with domestic automakers in China, which has surpassed Japan as the world’s largest car exporter last year and is set to pull further ahead in 2025. The two companies have had to pare back staffing and production in China, while Mitsubishi Motors Corp. has largely pulled out of the market.
The potential merger comes at a challenging time for Honda, which recently announced a ¥1.1 trillion ($7 billion) buyback. This move could impact any spending Honda may need to do to catch up with BYD. Analysts have warned that large-scale share repurchases can harm a company’s future prospects and lead to capital outflows.
In November, Honda’s sales in China fell 28% year-on-year, while Nissan’s sales dropped 15.1%. The potential merger could also pose a threat to Toyota Motor Corp., which has seen its global sales plateau in recent months due to lackluster demand and production pauses at two of its plants.
As the automotive industry continues to evolve, it will be interesting to see how Honda and Nissan navigate their challenges and whether their proposed merger can help them regain ground against BYD and other Chinese competitors.
Source: https://finance.yahoo.com/news/honda-nissan-deal-may-key-073123125.html