Nissan, Honda to merge to take on global competition
By : Michael Gonsalves
Update: 2024-12-24 11:33 GMT
Pune: Two Japanese giant automakers Honda and Nissan are in talks to merge by 2026, they said on Tuesday, indicating that they plan to take on the Chinese EV makers who now pose a threat to the world's long-dominant legacy car makers.
The merger would also help Honda and Nissan, who have tasted some degree of success in India, but have struggled to build on it.
Honda and Nissan on Monday signed a memorandum of understanding to formally begin talks aimed at deepening a partnership that began this year.
Over the next six months, the companies will discuss combining their operations under a holding company, with the goal of completing the merger in August 2026.
The tie-up would create the world's third-largest auto group by vehicle sales after Toyota and Volkswagen, which have been successful in the fiercely competitive Indian car market.
The merger would also give the two companies scale and a chance to share resources in the face of intense competition from Tesla and more nimble Chinese rivals, such as BYD.
The merger of Honda, Japan's second-largest automaker, with Nissan, its third biggest, would be the biggest reshaping in the global auto industry since Fiat Chrysler Automobiles and PSA merged in 2021 to create Stellantis in a $52-billion deal.
Smaller Mitsubishi Motors in which Nissan is top shareholder, was also considering joining and would make a decision by the end of January, the companies said.
The chief executives of all three held a joint press conference in Tokyo on Monday.
"The rise of Chinese automakers and new players has changed the car industry quite a lot," said Honda CEO Toshihiro Mibe, citing technological trends of electrification and autonomous driving.
"We have to build up capabilities to fight with them by 2030, otherwise we'll be beaten," he added.
The two companies would aim for combined sales of 30 trillion yen ($191 billion) and operating profit of more than 3 trillion yen through the potential merger, they said.
They aimed to wrap up talks around June 2025 before setting up a holding company by August 2026, when shares of both companies would be delisted.
Honda, which has a market capitalisation of more than $40 billion, roughly four times that of Nissan, will appoint the majority of the company's board, they said.
Combining with Mitsubishi Motors would take the Japanese group's global sales to more than 8 million cars. The current No. 3 is South Korea's Hyundai and Kia.
Honda and Nissan have been exploring ways to bolster their partnership, including a merger, Reuters reported last week.