Japanese automakers Honda and Nissan are in talks to merge to take on China’s burgeoning electric vehicle industry. If the merger goes through, it will create the world’s third-largest automaker in terms of car sales after Toyota and Volkswagen. The Japanese automaker said the businesses of both companies will be combined under a holding company, with a complete merger including smaller rival Mitsubishi Motors expected to be completed in August 2026. A deal would strengthen efforts on electric vehicles and new technologies. Japan’s once seemingly invincible auto industry is being reshaped by challenges from Chinese rivals such as Tesla and BYD. As Tesla and BYD gain market share, traditional companies are being forced to forge new partnerships, such as those being considered by Honda and Nissan.
The two companies partnered to develop electric vehicles in March. The two companies announced in August that they would collaborate on battery technology. Still, sales continue to decline, forcing Nissan to recently announce that it would cut 9,000 jobs, cut global manufacturing capacity by 20% and cut costs by $2.6 billion. The merger would bring global annual sales to more than 7 million units, with economies of scale potentially reducing costs and accelerating growth. That would create a $54 billion company. French automaker Renault, Nissan’s largest shareholder, says it is open to merger talks.
North America remains a major market for most automakers. In 2023, about one-third of Honda’s car sales will be in the United States. Including Canada and Mexico, North America accounted for 37% of Honda’s total sales, compared to 31% in China and 15% in Japan. On the other hand, Europe accounted for only 2% of Honda’s sales. For Nissan, North America will account for 37% of its car sales in 2023, with the US market alone accounting for 27%. Other regions included China at 23%, Japan at 14% and Europe at 10%.
Honda and Nissan are both working to expand their efforts in electrification and technology. Honda has set a goal of producing more than 2 million electric vehicles annually by 2030. By that year, 40% of new vehicle sales will be made up of electric vehicles and fuel cell vehicles, and the company plans to achieve 100% by 2040. Additionally, Honda plans to sell 1.3 million hybrid vehicles annually by 2030, which is double the number of hybrid vehicles sold in 2023, reflecting strong demand for gasoline-electric hybrid vehicles in North America. It will be. Nissan, which pioneered mass-market electric vehicles with the Leaf in 2010, aims for electric and hybrid vehicles to account for 60% of global sales by 2030. Nissan is also working to introduce 16 electrified models by 2026. There are a total of 30 models, with the remaining vehicles still relying on internal combustion engines. Currently, Nissan’s only all-electric vehicles are the Ariya SUV and Leaf.
Both automakers manufacture vehicles in Mexico for export to the United States and have expressed concern about the potential impact of President-elect Donald Trump’s proposed 25% tariff on vehicles imported from Canada and Mexico. I am doing it. Honda also operates a factory in Canada, but both companies have manufacturing facilities in the United States, with Honda having 12 factories producing automobiles, power equipment and aircraft engines, and Nissan three.
Despite their global expansion, Honda and Nissan face challenges in China, the world’s largest car market. Initially, Chinese consumers preferred foreign brands, but there has been a shift towards domestic brands that offer value for money. The Chinese government has also introduced generous incentives to encourage the uptake of electric and plug-in hybrid vehicles. Domestic manufacturers like BYD can offer more affordable prices, benefiting from China’s low labor costs, cheap energy from coal-fired power plants and its dominant position in global battery production. Additionally, Chinese automakers have attracted attention for their innovative in-vehicle software, some of which is connected to the internet, raising national security concerns in the United States and other countries. China has also overtaken Japan to become the world’s largest automobile exporter.
conclusion
Japanese automakers Honda and Nissan are in talks to merge to compete with China’s EV industry. Mitsubishi Motors may eventually join the agreement, as Nissan is Mitsubishi Motors’ largest shareholder with a 24% stake. The merger of the two companies will create the third-largest automaker after Toyota and Volkswagen, but Volkswagen is closing a factory for the first time in its history to cut costs as it transitions to electric vehicle production.
Once-dominant automakers are being forced to rethink how they run their legacy companies as rivals like Tesla and China’s BYD gain market share, forcing some to form new alliances. There is. China is now the world’s biggest car exporter, producing cheap electric vehicles that foreign companies have struggled to compete with. While the West seeks more and more “green” energy, China is ready to produce it, and Western industry is scrambling to adapt to the new reality created by its own government’s policies. are. China has turned its national security weakness in oil, natural gas and coal resources into a strength in “clean” and “green” manufacturing, capitalizing on the West’s obsession with reducing carbon emissions and complying with the UN’s Paris Agreement. are. Match.
