The bosses of Nissan, Honda and Mitsubishi Motors, during a joint press conference in Tokyo, December 23, 2024 (AFP / Philip FONG)
The Japanese automobile giant Honda and its struggling compatriot Nissan decided on Monday to open negotiations with a view to a merger which would give birth in 2026 to the third largest manufacturer in the world.
Their objective is to combine their forces to negotiate the strategic shift towards electric, dominated by the American Tesla and the Chinese groups, BYD in the lead.
Like the German Volkswagen, the two Japanese groups have seen their sales plummet in China, the world's largest market on which they are very dependent.
Honda and Nissan, second and third Japanese manufacturers behind Toyota, wish to conclude “a definitive agreement” by June 2025, according to the protocol signed on Monday. Their objective: to come together under a “single holding”, which they plan to IPO in August 2026, while retaining their current brands.
Makoto Uchida, the boss of Nissan, during a press conference in Tokyo, December 23, 2024, with his counterparts from Honda and Mitsubishi Motors (AFP / Philip FONG)
This marriage would make it possible to share the high costs and risks of developing electric models, software and batteries, securing supply chains and gaining competitiveness via economies of scale.
Mitsubishi Motors, of which Nissan is the main shareholder, will determine by “the end of January” whether it intends to join this alliance, where each could assemble its vehicles in the partners' factories.
The three manufacturers combined would constitute the third largest automobile group in the world, with some eight million vehicles sold last year, behind Toyota and Volkswagen.
-Nissan “in panic mode”-
A providential rapprochement for Nissan: heavily indebted, it suffered an unexpected loss in the last quarter and its operating margin almost completely melted.
In its two key markets, its sales have plunged: in the United States, due to failure to market plug-in hybrids in the face of strong demand, and in China, due to the domination of local brands in all-electrics.
Takao Kato, the boss of Mitsubishi Motors, during a press conference in Tokyo, December 23, 2024, with his counterparts from Nissan and Honda (AFP / Philip FONG)
At the beginning of November, Nissan announced that it would cut 9,000 positions from its global workforce and cut its capacity. A sign of its vulnerability: the Taiwanese electronics assembly giant Foxconn (Hon Hai) recently approached it to acquire a majority stake according to the Japanese press, precipitating the opening of negotiations with Honda.
Undermined by internal “power struggles”, Nissan “has marginalized itself” and finds itself “in panic mode, begging its eternal enemy” Honda, mocked the manufacturer's former boss Carlos Ghosn on Monday from Lebanon where he fled in 2019 while being pursued in Japan for financial embezzlement.
Honda, for its part, would benefit from an enlarged entity to effectively launch 100% electric cars, after the failure of a joint project with the American General Motors.
Japanese groups have long focused on hybrids (combining thermal and electric engines), neglecting the global rise of all-electric technology. China has overtaken Japan as the leading vehicle exporting country in 2023.
Alarmed, Nissan and Honda unveiled in March a “strategic partnership” in software and equipment for electric vehicles. Initiative joined in August by Mitsubishi.
-“Preparing for the future”-
“If the merger aims to prepare for the future, to develop the components of future electric cars that we hardly produce today, that makes sense”, but “an operational merger will not solve Nissan’s urgent problems” , a source close to the matter told AFP.
Toshihiro Mibe, the boss of Honda, during a press conference in Tokyo, December 23, 2024, with his counterparts from Nissan and Mitsubishi Motors (AFP / Philip FONG)
“It is not a question of providing assistance” to Nissan, Toshihiro Mibe, boss of Honda, confirmed to the press, who sets as a prerequisite the realization by Nissan of its plan to reduce its costs and revive its sales.
Nissan CEO Makoto Uchida acknowledged that his group had “problems” to overcome, but is banking on “synergies” with Honda, whose “agility” he praises.
Faced with the changes in an automobile industry where IT and technology are essential, “we will only be able to progress by having the courage to change ourselves,” he said.
Reflecting unequal situations, while Honda is valued on the stock market four times more than Nissan for comparable sales volumes, Honda will be able to select the main managers of the future holding company.
Former Renault-Nissan boss Carlos Ghosn on September 29, 2020 in Jounieh, Lebanon (AFP / ANWAR AMRO)
“Honda has no experience in terms of alliances, mergers, it won't work” and “from an industrial point of view, there are duplicates everywhere”, the two manufacturers marketing neighboring models “with the same strengths and weaknesses,” scathed Mr. Ghosn.
At the risk of painful restructuring therefore. A merger would generate profits after 2030, Mr. Mibe simply assured.
The operation would contribute to further blurring the historic alliance, established by Carlos Ghosn, of Nissan with Renault: the Frenchman is gradually reducing his presence in the capital of the Japanese group after years of a stormy relationship. But he still controls some 35%, he guaranteeing a decisive voice, and should seek to preserve the joint projects it maintains with Nissan.
