Japanese automakers Honda and Nissan to merge by 2026

 Chinese electric vehicle manufacturers are now a threat to the world's long-standing dominant legacy of automakers. Press conference of Japanese company heads

Tuesday, December 24, 2024

Tokyo (News International / Latest News - International Press Agency. December 24, 2024) Japanese carmakers Honda and Nissan have decided to merge by 2026. According to the British Broadcasting Corporation, a statement issued by both carmakers said that this is a historic turning point for Japan’s auto industry and indicates that Chinese electric vehicle manufacturers are now a threat to the world’s long-dominant legacy carmakers.

After the deal, it will become the world’s third-largest auto group in terms of vehicle sales after Toyota and Volkswagen. It will also give the two companies the opportunity to share resources in the face of fierce competition from faster Chinese rivals such as Tesla and BYD. The merger of Japan’s second-largest automaker Honda and the No. 3 company Nissan will be the biggest change in the global auto industry since the merger of Fiat Chrysler Automobiles and PSA in 2021.

Both companies said Mitsubishi Motors, in which Nissan is the largest shareholder, is also considering joining and will make a decision by the end of January. The chief executives of the three companies held a joint press conference in Tokyo. Honda CEO Toshihiro Maebe said the rise of Chinese automakers and new companies had changed the car industry significantly, citing technological trends in electric vehicles and autonomous driving.

We must build the capabilities to fight them by 2030 or we will face defeat, he said. Honda and Nissan plan to achieve combined sales of $191 billion and operating profit of more than 3 trillion yen through the potential merger. They aim to complete the talks by June 2025, before establishing a holding company by August 2026, before the two companies’ shares are delisted.

Honda, which has a market capitalization of more than $40 billion and is about four times larger than Nissan, will appoint a majority of the company's board after the merger. Together with Mitsubishi Motors, the Japanese group's global sales will exceed 8 million units. Currently in third place are South Korea's "Hyundai" and "Kia". Last week, news broke that Honda and Nissan were considering ways to strengthen their partnership, including a merger. In March, the two said they were considering cooperation in the production of electricity and software. They expanded cooperation with Mitsubishi Motors in August. Last month, Nissan announced plans to cut 9,000 jobs and reduce its global production capacity by 20 percent after its sales in key markets of China and the United States fell. Honda reported worse-than-expected earnings due to declining sales in China, while its motorcycle and hybrid car businesses helped it achieve a relatively solid financial footing.

However, Honda official Mebe said that the move is not aimed at saving Nissan. Changes in Nissan's business are a condition for the merger. Like other foreign automakers, Honda and Nissan have lost ground in China, the world's largest market, to BYD and other local companies making electric and hybrid cars equipped with advanced software. In an online press conference, former Nissan Chairman Carlos Ghosn said that he was not sure that the Honda-Nissan alliance would succeed because the two automakers were not supportive of each other.

French automaker Renault, Nissan’s largest shareholder, said it would hold discussions with Nissan and consider all possible options. Sources said Renault is ready in principle for a merger between Honda and Nissan. It has been reported that Taiwanese company Foxconn approached Nissan about a bid to expand its fledgling EV contract manufacturing business, but the Japanese company rejected it. Earlier, Bloomberg reported that Foxconn decided to halt the process after sending a delegation to meet Renault officials in France. Nissan Chief Executive Makoto Uchida denied at a press conference that Foxconn’s move had sparked merger talks with Honda.