Nissan and Honda Deny Merger Reports, Confirm Talks on Future Collaboration

Japanese automakers Nissan Motor Corp. and Honda Motor Co. confirmed on Wednesday that they are discussing closer collaboration but denied reports of a decided merger.

Nissan’s share price surged by over 22% in Tokyo following reports from unnamed sources suggesting a potential merger with Honda, which would create the world’s third-largest automaking group. Conversely, Honda’s share price dropped by up to 3%.

The reports also indicated that Mitsubishi Motors Corp., a member of the Nissan alliance, is involved in these discussions.

In August, all three Japanese automakers announced plans to share components for electric vehicles, such as batteries, and to jointly research autonomous driving software to better adapt to the industry’s shift towards electrification. A preliminary agreement between Honda, Japan’s second-largest automaker, and Nissan, the third largest, was announced in March.

Trading in Nissan’s shares was temporarily suspended but later resumed after the companies issued a joint statement clarifying that they are “considering various possibilities for future collaboration, but no decisions have been made.”

A merger could potentially create an entity worth approximately $55 billion based on the combined market capitalisation of the three automakers.

Such an alliance would enable the two companies to achieve greater scale, enhancing their ability to compete with Japan’s market leader, Toyota Motor Corp., and Germany’s Volkswagen AG.

Nissan’s alliance with Renault SA is currently under review. Last month, Nissan announced it would cut 9,000 jobs, about 6% of its global workforce, and reduce global production capacity by 20% following a quarterly loss of 9.3 billion yen ($61 million).

Earlier this month, Nissan restructured its management, with CEO Makoto Uchida taking a 50% pay cut to assume responsibility for the company’s financial difficulties. Uchida emphasised the need for Nissan to become more efficient and responsive to market trends, rising costs, and other global changes.

Honda reported nearly a 20% decline in profits for the first half of the April-March fiscal year compared to the previous year, citing reduced sales in China.

The rise of Chinese automakers is significantly impacting the industry, especially as manufacturers transition from fossil fuel vehicles to electric ones.

In 2023, Toyota produced 11.5 million vehicles, while Honda manufactured 4.2 million and Nissan 3.4 million. Mitsubishi Motors produced just over 1 million vehicles. Even with a merger, Toyota would remain Japan’s largest automaker.

Frances Ibiefo

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