Thursday, December 19, 2024
By Kamal Swami
Nissan and Honda Refuse Merger Reports: Explore Partnership
The coming few days will be no less than a revolution in the Japanese car industry. According to reports, two Japanese auto giants, Nissan Motor Corp and Honda Motor Co, have confirmed that they are discussing a close collaboration but have refused to merge their groups. The confirmation regarding collaboration came after rumours of both auto giants merging to form the world’s third-largest auto manufacturing company. The rumours of their merger resulted in a 24% decline in Nissan’s share and a 3% decline in Honda’s share.
According to sources, Mitsubishi Motors Corp, Nissan’s alliance member is also a part of discussions between both groups. In a joint statement issued by both the companies, “We are considering various possibilities for future collaboration, but no decisions have been made.”
Industry Pressures: Reason behind the collaboration: If industry reports are believed, the discussion of a merger between the Japanese group came to increasing dominance of Chinese automakers in the global market with affordable electric vehicles. Companies like BYD, Great Wall Motors, and Nio are making huge profits not only in the Chinese car market but also in the global car market. This move has inspired all major automakers including Japanese car makers, to shift towards the production of electric vehicles.
Nissan, Honda, and Mitsubishi are miles behind their competitors in EV development and are now working to streamline costs. In August, the trio announced plans to share electric vehicle components, including batteries, and jointly research autonomous driving software. A preliminary agreement between Nissan and Honda was also disclosed in March.
The Expected Impact of a Merger: If this merger takes place, the joint market value of the group would be $55 billion. Analysts suggest that such a move could help the smaller Japanese automakers compete with industry giants like Toyota Motor Corp., Japan’s largest automaker, and Germany’s Volkswagen AG. Toyota, which produced 11.5 million vehicles in 2023, has maintained its leadership partly through technology partnerships with Mazda Motor Corp. and Subaru Corp.
In the words of Sam Fiorani, Vice President of Auto Forecast Solutions, Honda could benefit from Nissan’s expertise in truck-based SUVs, battery technologies, and hybrid powertrains. “Nissan does have some product segments where Honda doesn’t currently play”. He also added that while Nissan’s electric vehicles, such as the Leaf and Ariya, have underperformed in the U.S., the technology remains solid and could play an incredible role in Honda’s plans for EV development in future.
