Japanese automobile giant Honda and its struggling compatriot Nissan have agreed to open negotiations for a merger likely to create the world number three in the sector, Nissan said in a press release on Monday, December 23. Mitsubishi Motors, of which Nissan is the main shareholder, will be able to join discussions to integrate the new industrial alliance within a “single holding company”.
This project comes at a time when traditional manufacturers are being crushed by the slowdown in the market and the costly transition to electric, a technological shift dominated by the American Tesla and Chinese groups, with BYD in the lead. Like the German Volkswagen, Honda and Nissan have seen their sales plummet in China, the world’s largest market on which they are very dependent.
Already associated in a “strategic partnership”, Nissan and Honda, the second and third Japanese manufacturers behind Toyota, intend to reach an agreement by June 2025, with a view to coming together under a single holding company in August 2026, according to the daily Nikkei. With this new industrial alliance, everyone could assemble their vehicles in the partners’ factories.
Nissan “in panic mode”-
A providential rapprochement for Nissan: heavily indebted, it suffered an unexpected net loss in the last quarter and its operating margin almost completely melted. In its two key markets, its sales have plunged: in the United States, due to a lack of plug-in hybrids in the face of strong demand, and in China, due to the domination of local brands in all-electric vehicles. At the beginning of November, Nissan announced that it would cut 9,000 positions from its global workforce. Witness to its vulnerability: the Taiwanese electronic assembly giant Foxconn (Hon Hai), supplier to Apple, approached Nissan to acquire a majority stake, according to the Japanese press, precipitating the opening of negotiations with Honda. Undermined by internal “power struggles”, Nissan “has marginalized itself due to its own errors” and today finds itself “in panic mode, begging its long-time enemy” Honda, Honda told the press on Monday. former boss of the manufacturer, Carlos Ghosn.
Honda, for its part, would benefit from an enlarged entity to effectively launch fully electric cars, after the failure of a joint project with the American General Motors. The group is aiming for 100% electric vehicles by 2040. A marriage would make it possible to share the high costs and risks of developing electric models and batteries, secure supply chains and gain competitiveness through energy savings. ladder.
Japanese groups have long focused on hybrids (combining thermal and electric engines), neglecting the global rise of all-electric technology. China has thus overtaken Japan as the leading vehicle exporting country in 2023. Alarmed, Nissan and Honda unveiled in March a “strategic partnership” in software and components for electric vehicles. Initiative joined in August by Mitsubishi.
“If the Nissan-Honda merger aims to prepare for the future, to develop the components of future electric cars that are hardly produced today, it makes sense,” a source close to the matter told AFP.
What about Renault?
According to Kyodo media, Honda is demanding that Nissan initiate a “V-shaped recovery” in its performance as a condition of the merger while being ready to help it produce hybrids in North America.
It would not be a union between equals, Honda being valued on the stock market four times more than Nissan, auguring complex negotiations on common governance. “Honda has no experience in terms of alliances or mergers, it’s an engineering firm, it won’t work […] A possible merged group will fight for its survival and its positioning, it will have difficulty facing the Chinese, Tesla and Toyota,” judged Carlos Ghosn.
A merger would contribute to further blurring the historic alliance, established by Carlos Ghosn, of Nissan with Renault, which is gradually reducing its presence in the capital of the Japanese group, after years of a stormy relationship. The Frenchman still controls some 35% of Nissan (17% directly, and 18.6% via a trust intended to be gradually sold), guaranteeing him a decisive voice in the fate of the Japanese group. “Renault has rebalanced the alliance, without unraveling it: it is in its interest to preserve the projects they still have together” and to ensure as a shareholder the value of the Nissan stock, insists the close source.