[News] Honda and Nissan Reportedly Enter Merger Talks Amid Rising EV Competition from China

According to a report by Central News Agency, citing Nikkei, Japanese automakers Honda Motor and Nissan Motor are reportedly discussing a potential merger. The Nikkei report highlights that the two companies aim to combine their resources to enhance their competitiveness against Tesla and Chinese EV manufacturers.

Nikkei notes that sources indicate Honda Motor and Nissan Motor are seeking to operate under a single holding company and are expected to sign a memorandum of understanding (MOU) for this new entity soon.

The New Holding Company Might Also Include Mitsubishi Motors 

Honda and Nissan are also reportedly considering including Mitsubishi Motors in the new holding company, as Nissan is currently the major shareholder of Mitsubishi Motors. The Nikkei report points out that the combined sales of the three automakers would exceed 8 million vehicles, making them the third-largest automotive group globally.

According to a report from NHK, Honda President Mibe Toshihiro confirmed that the company is in talks about strategic partnerships with Nissan but did not confirm a merger. Nissan echoed this, stating that while discussions are ongoing, no agreement has been made.

Honda and Nissan began planning for negotiations in March, as Nikkei notes. In August, they formed a partnership focused on shared automotive components and software. Mitsubishi had also expressed interest in collaborating with the two automakers.

The Nikkei report indicates that merger discussions between Honda and Nissan are taking place against the backdrop of rapid expansion by BYD and other emerging Chinese players in the EV market, bolstered by strong support from the Chinese government, while EVs and other new energy vehicles are projected to account for 40% of vehicle sales in China this year, as the report notes.

The Challenges Posed by Rising Chinese EV Makers 

The rise of Chinese automakers has diminished the presence of Japanese carmakers in both China and Southeast Asia. As noted by Nikkei, Honda’s sales in China during the January-November period dropped by 30.7% year-on-year, while Nissan’s sales fell by 10.5%.

As a result, Honda has decided to cut its global production capacity by approximately 500,000 units, or about 10%. The Nikkei report indicates that the reduction includes its first capacity cut in China, which has surpassed the U.S. as Honda’s largest production hub.

As for Nissan, the company has faced challenges not only in China but also in the U.S., where delayed product development has hindered its ability to launch plug-in hybrids despite growing demand. In November, Nissan announced plans to reduce production capacity by 20% and cut nearly 10% of its global workforce. The Nikkei report suggests that Nissan views a deeper partnership with Honda as crucial to its rebound.

The report from Nikkei notes that other global automakers are also pursuing strategic collaborations. For instance, in September, General Motors announced plans to explore a partnership with Hyundai Motor on EVs and software. BMW revealed a partnership with Toyota Motor to develop fuel cell vehicles, while EV startup Rivian Automotive is collaborating with Volkswagen.

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(Photo credit: Honda)