Honda and Nissan have developed their companies based mostly on their very own methods. Therefore, it might be troublesome for them to supply important results rapidly by their merger, stated specialists.
TOKYO, Dec. 25 (Xinhua) — Japanese automakers Honda Motor and Nissan have agreed to start merger talks, hoping to ascertain a brand new holding firm by round August 2026, pushed by the worldwide auto trade’s fierce competitors in electrification and software program integration, whereas analysts stated the alliance faces structural obstacles.
The two corporations on Monday signed a memorandum of understanding to start out discussions towards a enterprise integration underneath a brand new holding firm, creating the world’s third-largest automaker group to compete with U.S. and Chinese opponents within the electrical automobile market.
Honda and Nissan, Japan’s second- and third-largest automakers by quantity, respectively, intention to wrap up negotiations on the phrases of the merger by June 2025, whereas Mitsubishi Motors, Nissan’s associate, will determine by the tip of January 2025 on whether or not to hitch the merger, the automakers stated at a news convention.
Each firm would function underneath its personal model within the holding firm that may intention to checklist shares shortly after it’s established.
The merged entity would create the world’s third largest automaker by quantity after Toyota Motor and the Volkswagen Group, increasing improvement of EVs and self-driving tech whereas coming to the rescue of struggling Nissan.
In the primary half of this fiscal yr, Nissan’s web revenue fell greater than 90 % primarily as a consequence of sluggish gross sales within the U.S. and China. Following the disappointing earnings report, the corporate introduced it might minimize 9,000 jobs worldwide and cut back its international manufacturing capability by 20 %.
Nissan will press forward with its restructuring measures earlier than the 2 automakers conclude their merger talks, the businesses stated.
Before Monday’s merger talks kicked off, Honda and Nissan already agreed in March to start a feasibility research on a strategic partnership in EV manufacturing and software program applied sciences to chop prices and enhance competitiveness, with Mitsubishi Motors becoming a member of the talks in August.
“We hope Japanese companies will take steps to respond to these changes and take measures to survive and win amid international competition,” prime authorities spokesman Yoshimasa Hayashi stated Monday.
Meanwhile, former Nissan Motor Chairman Carlos Ghosn, who fled Japan whereas awaiting trial on fees of monetary misconduct, stated Monday that the deliberate merger cannot work as he sees restricted potential for synergy.
Ghosn stated that there was “no complementarity” between the 2 makers, noting Nissan requested Honda for assist “in panic mode.” Analysts, in the meantime, have identified that Nissan and Honda have comparable manufacturing lineups and market operations.
The two corporations have strengths and weaknesses in “the same fields,” Ghosn stated, including it’s potential that “they can find synergies for the future … but the premises don’t look good.”
Auto trade specialists stated each corporations have developed their companies based mostly on their very own methods. Therefore, it is going to be troublesome for them to supply important results rapidly by increasing the scope of their collaboration to incorporate batteries, software program, and autonomous driving.
However, within the mid- to long-term, that is good for the Japanese automobile trade because it creates a second axis in opposition to Toyota. Constructive rivalry with Toyota is constructive for the moderately stagnating Japanese automobile trade when it should sustain with the competitors amid a quickly altering enterprise setting, they added.
“To lead the mobility transformation, we’ve come to think that we need something bolder than just cooperation in some specific fields,” Honda President and CEO Toshihiro Mibe stated Monday, “We have reconfirmed that a merger would create synergies in all kinds of fields.”
Obtaining the synergy targets would assist a mixed Nissan and Honda “become a world-class mobility company” with gross sales income exceeding 30 trillion yen (about 190 billion U.S. {dollars}) and working revenue of greater than 3 trillion yen,” Honda and Nissan said in a joint statement on Monday.
The new holding company is expected to be nominated by Honda, which will make up a majority of directors of the integrated company. As of Monday, Honda’s market capitalization was at 6.7 trillion yen, while Nissan’s was at 1.6 trillion yen.