Honda Motor Co. and Nissan Motor Co. could strengthen their struggling electric vehicle businesses through a merger, sharing substantial development costs and utilizing common parts for EVs, potentially reshaping the global auto industry.
Japan’s No. 2 and No. 3 carmakers by volume are in talks on a merger under a holding company, sources familiar with the matter said Wednesday.
The talks on the deal, which would create the world’s third-largest auto alliance after the Toyota and Volkswagen groups, follow the two automakers’ March agreement to conduct a feasibility study on a strategic partnership in EV production and software technologies to compete with overseas rivals such as Tesla Inc. and BYD Co.
Honda and Nissan are restructuring their operations in China to revive faltering sales amid fierce competition from local rivals like BYD, which are gaining market share with affordable battery-powered vehicles.
Nissan Motor Co. President Makoto Uchida (L) and Honda Motor Co. President Toshihiro Mibe attend a press conference on a feasibility study by the automakers for a strategic partnership in electric vehicle production and other advanced technologies in Tokyo on March 15, 2024. (Kyodo) ==Kyodo
The two carmakers have introduced fewer new EV models in the world’s largest auto market as they contend with rising research and development costs, not only for zero-emission vehicles but also advanced technologies such as autonomous, connected and shared vehicles, similar to many other global automakers.
“It is time to accelerate the development of EVs rather than slow it,” Jin Tang, senior principal researcher at Mizuho Bank, said.
Global EV sales are expected to grow 5.7-fold from the 2023 level to 57.13 million vehicles in 2040, according to research firm Fuji Keizai Group.
Honda is streamlining its production operations in China, planning to reduce its annual output capacity by 290,000 vehicles, with further cuts potentially needed due to declining sales. Nissan, meanwhile, closed one of its local plants earlier this year.
Chinese automakers, on the other hand, are also winning over customers with their low-priced EVs in Southeast Asian markets traditionally dominated by Japanese brands.
For Nissan, a closer partnership would be even more critical. The company is overhauling its global operations, including cutting 9,000 jobs and reducing output capacity by 20 percent, following a more than 90 percent drop in net profit in the first half ended September.
The new alliance would allow the two companies to achieve greater economies of scale by sharing parts, accelerating development and cutting costs through joint efforts, analysts say.
If Mitsubishi Motors Corp., currently partnered with Nissan, joins the new alliance, it could generate even greater synergy effects. The three companies said in a statement that they are “considering various possibilities for future collaboration, but no decisions have been made.”
Apart from the EV business, the outlook for the auto industry has become far more uncertain. U.S. President-elect Donald Trump is expected to raise tariffs on U.S. imports after taking office in January.
The U.S. market is the biggest market for both Honda and Nissan.
Combined file photo shows the logos of Honda Motor Co. and Nissan Motor Co. The two major Japanese automakers are in talks on the possible establishment of a holding company in a bid to form a global alliance to challenge foreign electric vehicle makers, a source familiar with the deal said on Dec. 18, 2024. (Kyodo) ==Kyodo
Related coverage:
Honda, Nissan in merger talks to form world’s 3rd-biggest auto group
Honda to end production of “Super Cub 50” motorcycle in May 2025
Nissan to ax 9,000 jobs, cut global output as U.S. business falters
