Honda and Nissan explore merger to create powerful auto giant

  • Honda and Nissan have begun negotiations to merge into a single holding company.
  • Mitsubishi Motors could be part of this great automotive alliance.
  • The goal is to compete in the electric vehicle market currently led by Tesla and Chinese manufacturers such as BYD.
  • The combined entity could produce a total of 8 million vehicles annually.

New Honda logo

Honda y Nissan are Talks are underway for a possible merger that could change the course of the entire automotive sector. According to the respected Japanese newspaper Nikkei, both Japanese manufacturers have decided to put aside their historical rivalry to face together the new challenges presented by the current market, especially in the field of electric vehicles.

This strategic union, which is still in an initial phase, seeks to bring both companies to operate under a single company. holdingThe signing of a memorandum of understanding is expected in the coming weeks, marking the formal start of a process that could give rise to one of the world's largest automotive conglomerates. Mitsubishi Motors, where Nissan has a 24% stake, could also be included in this alliance, further expanding the scope of the operation.

A new challenge for Honda, Nissan and the automotive industry

new nissan logo

In a sector facing a profound transformation, the rise of electric vehicles and the marked competition from Tesla and Chinese manufacturers , the BYD, has put pressure on traditional brands. Honda and Nissan have lost market share in key regions such as China, where local manufacturers dominate with competitive and affordable electric models.

The decision to merge comes amid growing urgency to adapt to new market demands. In 2023, 18% of vehicles sold globally were electric, according to data from the International Energy Agency (IEA)Of these, a whopping 70% were manufactured in China, demonstrating Asian leadership in this segment.

Previous collaborations between Nissan and Honda

Nissan Sakura EV Kei Car

This is not the first time these giants have considered joining forces. Earlier this year, both companies signed an agreement to jointly design Batteries and technologies related to electric vehicles. That agreement included the exploration of software platforms and other key components. However, the new merger proposal goes much further: involves the creation of a fully integrated entity, designed to compete globally with companies such as Toyota, Volkswagen and emerging electrical manufacturers.

The resulting group could produce up to 8 million vehicles per year, putting it close to the global leaders. Although it would still be behind Toyota, which makes more than 11 million vehicles annually, the merger would give Honda and Nissan a stronger position in a dynamic and competitive market.

Mitsubishi as a possible third member

Mitsubishi Motors Corporation logo

One of the keys to this merger would be the incorporation of Mitsubishi Motors, a brand with a great reputation in Asia. This inclusion would allow the new holding to increase not only its production capacity, but also its presence in markets where Mitsubishi already has a strong market share. The combined efforts of the three companies could create a Japanese automotive hub with global relevance.

However, many details remain to be defined. Aspects such as the distribution of capital, joint operations and the business model are being analysed. The main challenge is to achieve an alliance that benefits the three brands without losing the identity and autonomy that has characterised them until now.

A context of economic restructuring

The news of this possible merger comes at a difficult time for both companies. Nissan, affected by a fall in sales, 93,5% In its recent half-year earnings, it has announced job cuts and is in the midst of restructuring. Honda, meanwhile, has seen its focus on hybrid cars lose steam in the face of the accelerated adoption of electric vehicles.

In addition, many of the Chinese manufacturers and Tesla have taken advantage of this electric transition to gain ground. In the Spanish market, for example, Tesla leads with a 18% of the share of battery electric vehicles, according to a recent study. Meanwhile, brands such as BYD continue to gain popularity with competitive prices and innovative models.

Nissan Fairlady Z1

The success of this merger will depend on whether Honda, Nissan and possibly Mitsubishi can work together effectively. In the best-case scenario, the merger could represent a turning point in the industry, repositioning Japan as a dominant player in the global automobile market.

This alliance has the potential to closing the technological and market gap with current competitors, offering Japanese brands the tools they need to make up ground. If the project goes ahead, we could be seeing the birth of a new automotive colossus that will shape the future of global mobility. We'll see...

Source - Nikkei Asia

Images | Honda – Nissan


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