Michelle ThompsonHonda and Nissan have reportedly engaged in preliminary discussions about a potential merger to strengthen their competitiveness against electric vehicle (EV) manufacturers, particularly in China.
In March, both automakers agreed to explore a strategic collaboration for EVs. Responding to the BBC, the companies issued identical statements saying, “As announced in March, Honda and Nissan are examining various opportunities for future collaboration by leveraging each other’s strengths.”
This development comes as automakers face rising competition amid a shift from petrol and diesel to EV production, with China leading the charge. While neither Honda nor Nissan has denied the report initially published by Japanese newspaper Nikkei, they clarified that it was “not an announcement by either company.”
The discussions are said to be at an early stage, with no certainty of reaching a formal agreement. “If there are any updates, we will notify stakeholders at the appropriate time,” both companies added.
According to Japanese TV channel TBS, the companies might officially confirm the talks as early as next week. However, a merger between Japan’s second- and third-largest car manufacturers could face significant hurdles.
One key challenge would be political scrutiny in Japan, as any deal might lead to large-scale job losses. Additionally, Nissan would need to address its existing alliance with French automaker Renault.
In March, Honda and Nissan agreed to collaborate in EV development and expanded this partnership in August to include batteries and other technologies. They also entered into discussions with Mitsubishi Motors about intelligence and electrification, with the possibility of involving Mitsubishi in the partnership. Nissan currently holds the largest share in Mitsubishi.
Following the news, Nissan shares surged over 20% in Tokyo, Mitsubishi shares rose 13%, while Honda shares declined by 2%.
Edmunds analyst Jessica Caldwell highlighted the increasing difficulty for smaller automakers to remain viable in a competitive market, particularly with the growing presence of Chinese manufacturers. “This isn’t just about survival but also about funding future developments,” she noted.
Honda and Nissan have been losing market share in China, which accounted for nearly 70% of global EV sales as of November. Although the two companies collectively sold 7.4 million vehicles globally in 2023, they struggle to compete with more affordable EV makers like BYD, which surpassed Tesla in quarterly revenues for the first time in October.
Jesper Koll, of Monex Group, expressed skepticism about the potential benefits of a merger. “Is this just rearranging the deck chairs on the Titanic? Neither Honda nor Nissan currently offer products or technologies that global consumers demand,” he commented. “This might be a rescue effort but not one that creates a new industry leader.”
