Honda and Nissan have officially initiated discussions for a potential merger, announcing earlier this week the signing of a memorandum of understandings aimed at forming a joint holding company. This strategic move is not only about uniting two of Japan’s most significant automakers but also opens the door for Mitsubishi Motors to possibly join the partnership, enhancing their operational capabilities.
Both companies articulated their intentions through a joint statement, claiming, “With this move, we can aim to contribute to the development of Japan’s industrial base as a leading global mobility company.” The ambition is to integrate Honda’s motorcycle and power products businesses along with Nissan’s four-wheeled vehicles to create offerings more attractive to consumers globally. Though Honda is famously one of the top motorcycle manufacturers, it remains to be seen how this segment fits within the new partnership, considering Nissan has not ventured yet to produce two-wheeled vehicles.
The discussions come at a time when the automotive sector faces increasing competitive pressure. Presently, according to recent reports, Honda and Nissan rank as the seventh and eighth largest automakers globally. Yet, they find themselves competing against rapidly ascending rivals, such as BYD, which recently eclipsed Nissan's sales number. This shake-up highlights the urgency for both manufacturers to bolster their market positions as they take these significant steps toward consolidation.
The timeline for the merger is projected to move swiftly, with concrete plans set to solidify by January when the companies are expected to renew their discussion and deliberate the specifics of their future collaboration. Notably, the automotive segment’s primary focus remains, but the merger could yield considerable benefits if effectively executed.
Echoing these sentiments, TrendForce reports the merger's core priority will be resource integration—aiming for cost reductions through economies of scale and hastening their electric vehicle (EV) development plans. Currently, both Honda and Nissan are underperforming concerning their electrification goals, with their combined market share expected to dip below 5% for all electric vehicles, including battery-electrics, hybrids, and fuel-cell vehicles by the end of 2024.
If the merger proceeds as planned, Honda and Nissan might see new synergies emerge. Still, experts point out significant hurdles remain, particularly as it pertains to aligning electrification strategies. While Honda aims to transition to its Adapted Electric Platform with the goal of 100% global sales of battery electric and fuel-cell vehicles by 2040, Nissan is prioritizing its e-POWER hybrid technology, planning to incorporate either this or fully electric drivetrains across all new vehicles by 2030.
Adding to the promising outlook for the merger, Mitsubishi Motors may also play a valuable role, leveraging its expertise in electric motors and inverter technology to support integration strategies. Critics, nevertheless, caution about the complexity of weaving together distinct technologies from Nissan and Honda—a task likely to consume substantial time and resources.
Global projections by TrendForce forecast EVs will constitute approximately 25% of all new vehicle sales by 2024, indicating the pressing need for Honda and Nissan to solidify their offerings and capabilities quickly. Despite the growth rate of the EV market tapering, the trend is still upwards, with total vehicle sales potentially reaching 26 million globally by 2025.
With the automotive industry continuously transforming, no automaker can afford to remain idle. The impending merger doesn't just hold promises of future gains but reflects the current state of urgency for the involved parties—echoing the sentiment among analysts and stakeholders alike.
