Japanese Auto Titans, Honda & Nissan To Merge Soon

Japanese automotive giants Honda Motor and Nissan Motor are set to begin negotiations for a merger, according to the Japanese newspaper Nikkei. The companies have been growing closer in recent months as they navigate the transition to electric powertrains. Intense competition from global electric vehicle makers like Tesla in the US and Europe, and Chinese EV makers in Asia, particularly in China, the largest automotive market, is prompting the Japanese rivals to collaborate. Their vehicles are not as popular in the US and Europe, adding urgency to their discussions.

“As announced in March of this year, Honda and Nissan are exploring various possibilities for future collaboration, leveraging each other’s strengths,” the companies stated separately, adding that they will inform stakeholders of any updates at an appropriate time.

The two companies are reportedly contemplating forming a holding company. They will soon sign a memorandum of understanding to establish this structure. Eventually, they will also incorporate Mitsubishi Motors into this holding company, as Nissan holds a 24 percent stake in it. This move was made during Carlos Ghosn’s tenure as CEO of Nissan, Renault, and Mitsubishi Motors, which led to the formation of the alliance. 

Interestingly, French automaker Renault, a major Nissan shareholder, has no information about this development. This might not be surprising, given that Nissan was quasi-merged with Renault until their former CEO Carlos Ghosn was in charge. Ghosn’s spectacular ouster from Nissan involved charges against him, leading to his imprisonment in a Japanese prison for years, until he orchestrated an audacious escape to return to Beirut, Lebanon.

Specifically, the Japanese automakers are under pressure from Tesla in the US and BYD in China, resulting in financial losses on their next-generation vehicles while their current internal combustion engine vehicles suffer from the Osborne effect. Both Honda and Nissan aim to cut costs, but Nissan’s situation is dire, with only months’ worth of cash on hand. Honda and Nissan, like other. Toyota, its Japanese counterpart, may be the world’s leading car manufacturer, but it has lagged behind in the electrification revolution. However, its sheer scale and financial strength have shielded it from the financial difficulties faced by Honda and Nissan.

Japanese automakers were slow to embrace electric powertrains and now lag behind nimble Chinese EV companies that have benefited from an early shift towards the technology, an established electronics manufacturing ecosystem, and government support. Tesla, on the other hand, pioneered EVs and became the first major EV manufacturer in the US, Europe, and even potentially China. While Tesla faces challenges from the Chinese EV industry, its valuation has soared due to Elon Musk’s proximity to US President-elect Donald Trump after years of decline following his chaotic acquisition of Twitter in 2022. 

Honda’s market cap is $38.8 billion, while Nissan’s is $7.6 billion, compared to Tesla’s $1.49 trillion. Tesla’s value has increased after Donald Trump was elected for a second term, with his candidacy wholeheartedly backed by Elon Musk. This new peak valuation has also made Musk the first person in the world to be worth $400 billion. 

Sahil Mohan Gupta

BW Reporters Sahil is an experienced tech and auto journalist with more than 15 years in the field. He has played a pivotal role in launching major tech platforms in India across TV, print, and web. As the Tech and Auto Editor at BW Businessworld, he covers consumer technology and automotive sectors through reviews, reports, interviews, and analyses. Readers can anticipate insightful, witty, and deeply analytical content with a focus on the end user. In his leisure time, he enjoys music, particularly stone cold blues and progressive rock from the 60s.