Tokyo (AFP) – Honda and Nissan were poised Monday to announce the start of talks on a merger to help the Japanese giants catch up with Chinese rivals and Tesla on electric vehicles. Their collaboration would create the world’s third largest automaker, expanding development of EVs and self-driving tech while coming to the rescue of struggling Nissan.
The pair, along with Mitsubishi Motors, of which Nissan is a majority shareholder, will address reporters at 5:00 pm (0800 GMT) and are expected to sign a memorandum of understanding on the merger. Honda and Nissan — Japan’s number two and three automakers after Toyota — aim to finalize the deal in June 2025 and join forces in 2026, several local media outlets said.
But it’s unlikely to be a marriage of equals. Honda will nominate the president of the new holding company, whose board will be mostly made up of Honda executives, the Nikkei business daily reported. Mitsubishi Motors could join the new holding company early next year, the reports said.
Lackluster consumer spending and stiff competition in several markets are making life hard for many automakers. Business has been especially tough for foreign brands in China, where electric vehicle manufacturers such as BYD are leading the way as demand grows for less polluting vehicles. China overtook Japan as the biggest vehicle exporter last year, helped by government support for EVs.
Nissan has recently faced significant challenges, including a reported 93 percent plunge in first-half net profit, making the prospect of a merger with Honda appealing. Honda and Nissan held separate board meetings on Monday after informing the industry and transport ministries of their plan to start negotiations, according to Kyodo News. Honda and Nissan’s partnership could include a manufacturing tie-up where they build vehicles at each other’s plants, Kyodo added.
“We hope Japanese companies will take steps to respond to these changes and take measures to survive and win amid international competition,” top government spokesman Yoshimasa Hayashi said Monday. He declined to comment on the merger reports but highlighted the “importance of strengthening competitiveness in areas such as…batteries and in-vehicle software”.
In the meantime, Taiwanese electronics manufacturer Foxconn has reportedly sensed an opportunity. Foxconn, which builds devices for tech companies including Apple’s iPhones, initially approached Nissan with a bid to acquire a majority stake, according to Bloomberg. A Taiwanese media outlet later reported that Foxconn’s Jun Seki — a former Nissan executive — had visited France to ask Renault to sell its 35 percent share of Nissan, although reports later indicated that this pursuit had been put on pause.
Honda and Nissan already agreed in March to explore a strategic partnership on software and components for EVs among other technologies. This partnership was joined in August by Mitsubishi Motors, of which Nissan is a majority shareholder.
Nissan has weathered a turbulent decade, including the 2018 arrest of former boss Carlos Ghosn, who later jumped bail and fled Japan concealed in a music equipment box. Ghosn told reporters in Tokyo on Monday via video link from Lebanon, where he is at large, that turning to its arch-rival Honda showed that Nissan was in “panic mode”.
Although the two companies might be able to “find synergies for the future…I don’t see anything obvious into this partnership or this alliance,” Ghosn said.
© 2024 AFP
