Automotive Industry: Honda, Nissan on Their Way to Merger
This would create the third largest group in the world after Toyota and Volkswagen
A new giant of the automotive sector is about to be born. Two Japanese companies, Honda and Nissan, are beginning merger talks, according to Bloomberg and Japan’s Nikkei newspaper.
Honda and Nissan are the second and third most important manufacturers in Japan, respectively, and could, if the deal goes through, operate in a holding company that would also include the Mitsubishi Motor brand, of which Nissan is a major shareholder. Obviously, the aim is to optimize costs and increase competitiveness to compete with Chinese cars in a sector facing unprecedented challenges and the transition to electrification. If it goes through, it will be the largest merger ever recorded in the sector, even higher than the $52 billion operation that gave birth to Stellantis in 2021 with the merger of FIAT, Chrysler, and Peugeot. Nissan is in serious trouble right now, from an announced plan for major production cuts to the possible layoff of 9000 employees. In March 2024, the two companies have already signed a partnership to develop electric cars, now Nissan’s problems could lead to deeper cooperation.
As a result, the group will be able to produce more than 7 million cars, becoming the third largest manufacturer in the world, close to the level of Volkswagen and not too far behind Toyota. Executive scientist Sanshiro Fukao of the Itochu Research Institute explained to Reuters: “This deal looks more like a bailout for Nissan, but Honda itself isn’t resting on its laurels: Honda’s cash flow is bound to worsen next year, and its electric vehicles aren’t doing so well.”
