Honda Motor Co. and Nissan Motor Co. are set to provide updates on their planned merger by mid-February, having pushed back the original deadline from the end of January. This potential merger marks a significant development for Japan's auto industry, which finds itself under pressure from increasing competition, particularly from Chinese electric vehicle (EV) makers.
The two companies, both recognized as Japan's second and third-largest car manufacturers by volume, have been engaging in discussions around the finer points of their merger agreement. Last month, during a press conference, Honda’s CEO Toshihiro Mibe emphasized the importance of Nissan stabilizing its management and demonstrating progress on restructuring efforts prior to finalizing any merger.
Nissan is dealing with considerable challenges, having reported more than a 90% drop in net profit for the April-September period. To address its financial woes, Nissan announced plans to reduce its global production capacity by 20% and cut 9,000 jobs worldwide. These actions include measures to offer early retirement programs at its three U.S. plants and workforce reductions at its facilities in Thailand.
The restructuring is seen as necessary for Nissan to reassess its operations and align with Honda's vision for their joint future. Sources indicate Honda is still urging Nissan to take more drastic actions to facilitate the potential merger's success. Despite these challenges, Honda maintains optimism about the merger, though close-knit discussions continue around the detailed terms.
Importantly, the timeline for the merger has shifted slightly, with the cumulative discussions about forming the holding company now expected to wrap by June 2025. They aim to establish this holding structure by August 2026, as both automakers prepare for significant changes, including the potential delisting of their shares.
Nissan’s longstanding alliance with Renault—a significant stakeholder, owning 36% of Nissan—has also expressed openness to the merger, presenting another layer of complexity. Renault’s participation might weigh heavily on the nature and direction of the merger talks.
Another notable player, Mitsubishi Motors, which has been part of the Nissan-Renault alliance, has indicated hesitation about fully joining the merger. While Mitsubishi previously considered participating, reports now suggest the automaker is leaning toward maintaining its status as a publicly traded company. They are exploring collaborations with both Honda and Nissan outside the formal holding company structure. Mitsubishi is expected to clarify its position by mid-February 2025.
Overall, as Honda and Nissan push forward with their merger discussions, the automakers face the pressing need to modernize operations and address the emergent competition from the EV market. The anticipated merger could reshape both companies as they seek to solidify their positions against aggressive market challengers.
The coming weeks will be telling as these companies navigate their restructuring efforts, and the auto industry closely watches the developments leading to the anticipated merger.