Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
Nissan Motor CEO Makoto Uchida (L) listens to Honda Motor CEO Toshihiro Mibe (R) attend a joint press conference on March 15, 2024 in Tokyo, Japan.
Tomohiro Ohsumi | Getty Images News | fake images
Major Japanese car manufacturers NissanEngine and Hondamotors It is understood that they are exploring a blockbuster mergersending shock waves through the global auto industry as the two rival companies seek to remain competitive in the market. The path to total electrification.
Nissan and Honda plan to enter into merger talks, Japanese business newspaper Nikkei reported overnight, citing sources close to the matter and noting that the national peers hoped to sign a memorandum of understanding shortly. The two companies will also reportedly look to bring Mitsubishi Motors, in which Nissan is the largest shareholder with a 24% stake, into the deal.
The potential merger could create the world’s third-largest auto group by vehicle sales, with 8 million annual sales, according to Citi. This would put Nissan-Honda-Mitsubishi behind its Japanese counterpart. ToyotaEngine and from germany affected by the crisis volkswagenrespectively.
In similar statements, Nissan and Honda neither confirmed nor denied the Nikkei report. The newspaper after reported that talks could begin as early as next week.
The merger report comes at a time when many auto giants are struggling to cope with increased global competition from large electric vehicle manufacturers such as tesla and BYD of China.
Nissan and Honda previously counterfeit a strategic partnership in March to collaborate on the production of key components for electric vehicles.
However, a megamerger is expected to face several obstacles. Analysts have expressed concern about the likelihood of political scrutiny in Japan, given the potential for job cuts if a deal is reached, while the breakdown of Nissan’s alliance with the French vehicle maker renault It is considered fundamental to the process.
Peter Wells, professor of business and sustainability at Cardiff Business School’s Automotive Industry Research Centre, described the reported merger as a “really important” development, which could help Nissan and Honda unite their assets, save money on costs and create the technologies they need. need for the future.
“There has been a lot of speculation about Nissan’s position over the last 12 months or so. It has been trying to match or balance its relationship with Renault, but it has been struggling,” Wells told CNBC.Europe Street Signs” On Wednesday.
“It’s been struggling in the market, it’s been struggling at home, it doesn’t have the right product line. There are so many warning signs, so many red flags around Nissan right now that something had to happen,” he said. aggregate. “Whether this is the answer is another question.”
Nissan shares soared nearly 24% on Wednesday, setting the pace for the company. Best trading day in at least 40 years.according to data firm FactSet. The company’s Tokyo-listed share price remains nearly 25% lower so far this year.
Meanwhile, Honda shares fell more than 3% in New York.
Barriers to a possible merger
Asked whether consolidation between Nissan and Honda could emerge as a good way to combat competition from Chinese electric vehicle makers, Cardiff Business School’s Wells said the deal could be characterized as “a traditional solution.”
“My concern would be that maybe they left it a little late, that they don’t have the current technology and setup (or) the right product to compete in their key markets,” Wells said.
“For Nissan in particular, they are not in tune with the US market. That is their main concern and they can’t fix it very quickly,” he added.
Employees work on the new energy vehicle assembly line at a factory of Chinese electric vehicle startup Leapmotor on April 1, 2024 in Jinhua, China’s Zhejiang province.
vcg | China Visual Group | fake images
JPMorgan’s Akira Kishimoto shared similar views on some of the barriers to a potential Nissan-Honda merger, saying “the obstacles to overcome would be large.”
“At a minimum, we believe Nissan needs to clarify where its particularly complex capital relationship with Renault, which involves the French government, will end, and also provide details on the restructuring proposal it announced,” Kishimoto said in a research note published Wednesday.
“We think Honda needs to show how it will manage major investments (in battery electric vehicles) and batteries in Canada,” Kishimoto said.
JPMorgan said it would now have to wait for concrete announcements from either company.
“Large-scale transformation of the automotive industry”
“This union is not entirely unexpected because they obviously announced their partnership earlier this year,” Lucinda Guthrie, executive editor of Mergermarket, told CNBC’s “Street Signs Europe” on Wednesday.
“Some of the information I have seen claims that this occurred as a result of Foxconn making an approach to Nissan. “Now, with this particular transaction, I wonder if it will be a radical merger or if it will be more of a partnership,” he added.
Apple Supplier Foxconn has approached Nissan about taking a stake, Bloomberg reported Wednesday, citing an anonymous source. The Taiwan-based company has been investing heavily in electric vehicles in recent years. CNBC has contacted Foxconn for comment.
Echoing the latest development, Honda recently tested the water in a partnership with general motorsbefore finally decides to walk away.
Speculation about consolidation between Honda and Nissan could follow a similar trajectory, Guthrie said.
“You have to keep in mind that this would have to come with the blessing of the Japanese government because there is a possibility of staff cuts, but then how are Japanese automakers going to compete with low-cost vehicles from China?” Guthrie said.
Nissan signage at a dealership in Richmond, California, U.S., on Friday, June 21, 2024.
Bloomberg | Bloomberg | fake images
Citi’s Arifumi Yoshida said a merger would likely have a negative impact for Honda, but a positive one for Nissan and Mitsubishi.
“Given Honda’s competitiveness in motorcycles and (hybrid electric vehicles) and the strength of its brand, we believe it is positioned to take on its rivals over the next five to 10 years,” Yoshida said in a research note published Wednesday.
However, Yoshida said the decision could be seen as an “anticipation of the large-scale transformation of the automotive industry.”
—CNBC’s Michael Wayland contributed to this report.
