Nissan and Honda may merge soon!
Tokyo, Dec 18 (EFE).-
Japanese automakers Nissan Motor and Honda Motor said on Wednesday that they were exploring possibilities to deepen cooperation, following local media reports about talks between the two companies on a possible merger in the face of growing competition from Chinese electric vehicle manufacturers.
The two firms are reportedly preparing to begin negotiations aimed at creating a joint company that would be the world’s third largest automaker by sales volume, behind Toyota Motor and Volkswagen AG, according to the Japanese economic daily Nikkei and the Japanese news agency Kyodo.
“As announced in March, Honda and Nissan are exploring various possibilities for future collaboration, leveraging each other’s strengths. If there are any updates, we will inform our stakeholders at the appropriate time,” the companies said in a statement.
The main objective of a possible merger would be to face growing competition from Chinese and American electric vehicle manufacturers such as BYD and Tesla, which are capturing increasing shares in two of the main markets for Japanese manufacturers.
Two of Japan’s largest car manufacturers – behind Toyota – have been registering a drop in their sales in China, which has accelerated in recent quarters as local brands, with more affordable electric vehicles, gain traction both in the domestic market and internationally.
Another factor that experts point to as a motivation for the possible merger is the arrival at the White House of Donald Trump in January, and the possible imposition of tariffs that could harm Japanese manufacturers in the US market.
According to Nikkei, Honda plans to sign a memorandum of understanding with Nissan soon with the details of the operation, which could also include Mitsubishi Motor, whose main shareholder is Nissan.
Nissan and Mitsubishi are also part of an alliance with the French Renault.
The two corporations are considering combining their assets into a holding company, and the stake of each in the company will be decided later, Nikkei said.
If completed, the operation would leave the Japanese automotive market divided into two large blocks, one made up of Nissan and Honda and the other made up of Toyota.
The combined sales of both manufacturers would be around 8 million vehicles a year, since Honda sold 3.98 million units worldwide in 2023, and Nissan, 3.37 million.
After the first reports about the possible merger became known, the Tokyo Stock Exchange temporarily suspended trading in Nissan at the beginning of the day, claiming that it needed to verify media reports about the possible merger with Honda.
Trading in the firm’s shares was resumed during the first part of the day, and Nissan shares ended up 23 percent, while Honda Motor fell 3 percent.
This warm welcome by investors to the news of the possible merger reflects the hopes placed on the operation to revive the manufacturer based in Yokohama, south of Tokyo, which is going through a delicate financial situation.
In the last six months between April and September, Nissan recorded a 93.5 percent year-on-year drop in its net profit, attributed mainly to its poorer sales in China.
Following these results, the firm announced at the beginning of November a reduction of 9,000 jobs worldwide as well as a reduction of its production capacity by 20 percent, with a view to improving its liquidity and profitability.
Nissan, which like other established European, American and Japanese carmakers is having difficulties in adapting to the changing auto sector and the development of electric vehicles, had revealed in March that it was in talks with Honda for a possible alliance.
Both firms then spoke of collaborating in the production of components and software for electric vehicles, with a view to reducing costs and boosting their competitiveness in the expanding market.
In August, Mitsubishi Motors, of which Nissan owns 34 percent, joined the negotiations to become part of the eventual alliance. EFE
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