BANGKOK — Japanese automakers Nissan Motor Corp. and Honda Motor Co. have confirmed that they are in discussions for closer collaboration, but have denied reports of a potential merger between the two companies.
The news of a possible merger between Nissan and Honda sent shockwaves through the automotive industry, with Nissan’s share price soaring by more than 22% in Tokyo. However, Honda’s share price fell by 3%, indicating that the market was not entirely convinced of the potential merger.
Reports citing unnamed sources had suggested that the merger would result in the formation of the world’s third-largest automaking group, with Mitsubishi Motors Corp. also being included in the talks.
This development comes after all three Japanese automakers announced in August that they would be collaborating on sharing components for electric vehicles and jointly researching software for autonomous driving. This move was seen as a response to the rapidly changing landscape of the auto industry, which is increasingly focused on electrification.
In March, Honda and Nissan had announced a preliminary agreement for collaboration, and this latest news has only fueled speculation about the future of the two companies.
However, both Nissan and Honda have issued a joint statement clarifying that while they are considering various possibilities for future collaboration, no decisions have been made yet. This statement was followed by the resumption of trading in Nissan’s shares, which had been suspended earlier.
If the merger were to go through, it would result in a behemoth worth approximately $55 billion, based on the market capitalization of all three automakers. This would give the two companies a larger scale to compete with Japan’s market leader Toyota Motor Corp. and Germany’s Volkswagen AG.
It is worth noting that Nissan already has an alliance with Renault SA, which is currently under review. Last month, Nissan announced that it would be cutting 9,000 jobs, or about 6% of its global workforce, and reducing global production capacity by 20% after reporting a quarterly loss of $61 million.
In an effort to turn things around, Nissan recently reshuffled its management and its CEO, Makoto Uchida, took a 50% pay cut to take responsibility for the company’s financial woes. Uchida has acknowledged the need for Nissan to become more efficient and adapt to changing market tastes, rising costs, and other global changes.
Meanwhile, Honda has also been facing challenges, with its profits slipping by nearly 20% in the first half of the April-March fiscal year compared to the previous year. This was largely due to a decline in sales in China.
The automotive industry is currently going through a period of significant transformation, with the rise of Chinese automakers shaking up the market. This is happening at a time when traditional manufacturers are struggling to shift from fossil fuel-driven vehicles to electric ones.
In 2019, Toyota produced 11.5 million vehicles, while Honda rolled out 4.2 million and Nissan produced 3.4 million. Mitsubishi Motors, on the other hand, made just over 1 million. Even if a merger were to take place, Toyota would still remain the biggest Japanese automaker.
The potential merger between Nissan and Honda has generated a lot of buzz and speculation in the industry. While nothing has been confirmed yet, it is clear that both companies are looking for ways to stay competitive in a rapidly changing market. Only time will tell what the future holds for these two automotive giants.
