Honda Motor Co. and Nissan Motor Co. are reportedly exploring a potential merger that could reshape the Japanese automotive industry and create a significant rival to Toyota Motor Corp. Sources familiar with the matter disclosed that the discussions are in the early stages and could include options such as a merger, capital tie-up, or the creation of a holding company, says a Bloomberg report.
Shinji Aoyama, Honda’s executive vice president, confirmed on Wednesday that the company was evaluating various strategic options, including a possible merger, after reports of the talks surfaced. Following the news, Nissan shares surged as much as 24% during early trading on Wednesday, while Honda shares dipped by 3.4%.
One proposal involves establishing a new holding company to manage the combined operations. The deal could expand to include Mitsubishi Motors Corp., which already has capital ties with Nissan. However, the discussions remain preliminary and may not result in an agreement, the sources emphasised.
If a deal materialises, it would consolidate Japan’s auto sector into two dominant groups: one led by Honda, Nissan, and Mitsubishi, and another anchored by Toyota and its affiliates. This consolidation could strengthen the merged entity’s global competitiveness, especially in the face of challenges from electric vehicle (EV) manufacturers like Tesla Inc. and Chinese automakers.
The potential merger follows recent collaborations between Honda and Nissan on EV batteries and software. Earlier this year, Honda CEO Toshihiro Mibe mentioned the possibility of a capital partnership with Nissan, signalling a shift towards deeper cooperation.
Tatsuo Yoshida, a senior auto analyst at Bloomberg Intelligence, noted, “If the merger does materialise, it would provide short-term relief for Nissan’s financial struggles."
Honda, Nissan, and Mitsubishi together sold approximately 40 lakh vehicles globally in the first half of the year, lagging behind Toyota’s 52 lakh units. Combining their resources could help the three automakers counter Toyota’s dominance. Toyota has already established a formidable network by taking stakes in Subaru Corp., Suzuki Motor Corp., and Mazda Motor Corp.
“This would be good news for Nissan due to their weakened state, but they would face overlapping operations and other challenges,” a senior auto analyst said. “Meanwhile, Toyota may accelerate its integration efforts, potentially raising stakes in its partners like Subaru, Suzuki, and Mazda sooner rather than later."
Honda has faced challenges keeping pace with larger rivals in developing new technologies, despite recent efforts to expand hybrid and all-electric vehicle production. The company’s partnership with General Motors has also weakened, culminating in the recent dissolution of their self-driving car collaboration.
Nissan, meanwhile, is grappling with financial pressures and a stalled restructuring process. The Yokohama-based automaker has partially unwound its decades-long alliance with Renault and is reportedly seeking a major investor to replace part of Renault’s stake.
(By arrangement with livemint.com)
