Honda and Nissan begin talks for historic merger – DW – 12/23/2024
Honda and Nissan, Japan’s two major car companies, announced on Monday that they have signed a basic agreement to officially begin merger talks.
This merger will create the world’s third largest car company after Toyota and Volkswagen.
Mitsubishi Motors, in which Nissan is the top shareholder, was also considering joining, the companies said.
“The rise of Chinese automakers and new players has significantly changed the car industry,” said Honda CEO Toshihiro Mibe.
“We have to develop the capability to fight them by 2030, otherwise we will lose,” he said.
move away from fossil fuels
Executives from Japan’s second-largest automaker Honda and its third-largest automaker Nissan agreed to reach a formal merger agreement by June, complete the deal and list the holding company on the Tokyo Stock Exchange by August 2026.
Honda will initially be led by new management, but both brands will remain intact.
Honda and Nissan, like other automakers, have lost market share in China to various electric and hybrid carmakers, including BYD and Tesla.
China overtook Japan as the largest vehicle exporter last year, thanks to government support for EVs.
Nissan and Honda had already announced in March that they would work together on the development of future electric vehicles and software technologies to reduce their costs and improve competitiveness. Mitsubishi joined the talks in August.
Nissan chief Makoto Uchida praised Honda’s agility and ability to adapt to changes in the industry, praising the company as “a partner that can share a sense of crisis about the future.”
Uchida said, “As the business environment for automakers changes in the future, I believe we will not be able to get there unless we have the courage to change ourselves.”
Even after the merger, Toyota, which will make 11.5 million vehicles in 2023, will remain the leading Japanese automaker.
Last year, Honda, Nissan and Mitsubishi combined made more than 8 million vehicles.
Nissan is struggling financially
A merger could create a giant company with combined sales of 30 trillion yen ($191 billion) and operating profit of more than 3 trillion yen.
Nissan already has an alliance with France’s Renault Group, but it is currently under review as the company is facing financial crisis.
Last month, it announced it was cutting 9,000 jobs, about 6% of its international workforce, after posting a quarterly loss of 9.3 billion yen ($61 million). CEO Makoto Uchida announced he was taking a 50% pay cut as part of taking responsibility for the issues.
However, Honda’s Mieb said, “This is not a defense of Nissan,” adding that changes in Nissan’s business were a “condition” for the merger.
Honda is also struggling, reporting a 20% decline in profits in the first half of the fiscal year.
lo/rm (AP, AFP, Reuters)