ALBAWABA - In a bid to strengthen their position against growing international competition in the electric vehicle (EV) sector, Honda Motor and Nissan Motor are reportedly commencing talks on a possible merger.
The two manufacturers are reportedly considering setting up a single holding company, but specifics, such as share distribution remain to be determined, according to the Nikkei, with Mitsubishi Motors, in which Nissan holds a 24% stake, potentially be brought under the umbrella of this new alliance.
If finalized, the merger would reshape Japan’s auto industry by consolidating it into two primary forces; Toyota Motor Corp, and a newly formed Honda-Nissan-Mitsubishi group.
The initiative comes as both companies deal with growing threats from fierce EV rivals like Tesla and Chinese manufacturers like BYD. Even though Honda and Nissan have sold 7.4 million cars collectively in 2023, they continue to find it challenging to keep up with the quick EV advancements in China and other regions.
An important step toward cooperation was taken in March when the two manufacturers announced their intention to work together to develop EV technology, such as software and batteries. The need of adaptability was emphasized at the time by Nissan CEO Makoto Uchida, stating “Emerging players are very aggressive and are making inroads at incredible speed,” The Guardian reports.
The merger could represent the biggest consolidation in the sector since Stellantis was created in 2021 through the $52 billion merger between Fiat Chrysler and PSA Group. It also brings attention to various broad sector issues, such as declining earnings, a slowdown in EV demand, and the significant financial outlays necessary to switch from internal combustion engines to electric powertrains.
