In the early morning of December 18, Nihon Keizai Shimbun reported that Honda and Nissan had entered the process of merger negotiations to adapt to the rapid global competition. According to informed sources, Honda and Nissan are considering forming a holding company and are expected to sign a memorandum of understanding in the short term. At the same time, the two companies also plan to include Mitsubishi Motors in the holding company system. Currently, Nissan is the largest shareholder of Mitsubishi Motors, holding 24% of the shares.
In addition, according to Bloomberg, Honda's Executive Vice President Shinji Aoyama stated that the company is considering various options, including a possible merger with Nissan. Shinji Aoyama stated that both parties are indeed considering establishing a holding company to operate.
The relevant reports were not released by Honda. As announced in March and August this year, Honda, Nissan Motor Co., Ltd., and Mitsubishi Motors Corporation jointly discussed various possibilities for future cooperation based on their respective strengths. No decision has been made yet regarding the content of media reports. If there are any updates, stakeholders will be informed at an appropriate time The relevant person in charge of Honda China told the Daily Economic News reporter.
Regarding this news, the reporter also inquired with Nissan, but as of press time, the other party has not responded.
It is reported that if Nissan, Honda, and Mitsubishi merge, their annual sales are expected to exceed 8 million vehicles, enough to challenge global giants Toyota (with sales of 11.2 million vehicles in 2023) and Volkswagen (with sales of 9.2 million vehicles in 2023) and become the world's third-largest automotive group. At the same time, the restructuring of the three car companies will also become the largest merger in the global automotive industry since the merger of Fiat Chrysler Automobiles and French PSA Group to form Stellantis in January 2021.
After the merger news was announced, on December 18th, the Japanese stock market opened, and the stock prices of Nissan and Mitsubishi Motors skyrocketed. Nissan's stock price surged by 24% at one point, hitting the intraday trading limit.
On March 15th of this year, Nissan and Honda announced the signing of a memorandum of understanding to cooperate on joint procurement, joint development of power platforms, and the universalization of spare parts for electric vehicle businesses. Both sides hope to achieve cost reduction and enhance competitiveness in electric vehicle products through resource integration. At that time, Honda CEO Toshihiro Saburo proposed the possibility of capital cooperation with Nissan. On August 1st, the two sides signed a memorandum of understanding on deepening the strategic partnership framework and conducting joint research in the basic technology field of the next-generation software defined vehicle (SDV) platform.
The frequent rumors of a merger between the two parties are due to intensified competition in the global automotive market, rising costs, and challenges brought about by the electrification transformation, putting the profitability of car companies to the test.
Performance data shows that in the first half of fiscal year 2024 (from April 2024 to September 2024), Nissan's sales revenue was 5.98 trillion yen, a year-on-year decrease of 1.3%; Operating profit was 32.91 billion yen, a year-on-year decrease of 90.2%; Net profit decreased by 93.5% to 19.22 billion yen.
Given the above situation, Nissan has lowered its expectations for the fiscal year 2024. Among them, sales revenue decreased from 14 trillion yen to 12.7 trillion yen; Operating profit decreased from 500 billion yen to 150 billion yen; The global sales target has also been lowered from 3.65 million vehicles to 3.4 million vehicles.
The decline in Nissan's performance may be directly related to its poor sales in the Chinese and American markets. According to Japanese media reports, hybrid cars are becoming increasingly popular in the United States, but Nissan has not invested in such models in the US market. In the Chinese market, facing fierce competition from electric vehicles, Nissan lacks corresponding countermeasures and sales have also declined.
Official data shows that from January to November 2024, Nissan's cumulative sales in China, including its two major business segments of passenger cars and light commercial vehicles, were 621700 units, a year-on-year decrease of 10.53%; Among them, in November 2024, Nissan's sales in China, including passenger cars and light commercial vehicles, were 63500 units, a year-on-year decrease of 15.14%.
It is worth mentioning that another protagonist of the "acquisition rumors", Honda Motor, is also facing business difficulties. At present, Honda's automotive manufacturing business has an operating profit margin of only 3.6%, far lower than its motorcycle division's 18%. Some analysts estimate that by the end of March 2026, the operating profit margin of its automotive division may only increase by about 1 percentage point.
Data shows that in November, Honda's monthly terminal sales in the Chinese car market were 76800 units, a decrease of 28.01% compared to the same period last year, a decline of nearly 30%. Honda's monthly terminal sales in the Chinese car market have shown a year-on-year decline trend for 10 consecutive months.
Nihon Keizai Shimbun said that in the world automobile industry, Tesla and Chinese electric vehicle enterprises are challenging traditional large enterprises, and are undergoing historic structural transformation in both technology and participants.
In recent years, Chinese brands have accelerated their expansion into the global market, with increasingly diverse electric products and stronger cost control capabilities. This has squeezed the original market share of Japanese car companies, especially in Southeast Asia and the Chinese market, where they face significant challenges.
Public data shows that from 2019 to 2024, the market share of Japanese cars in markets such as China and Southeast Asia has significantly declined. Previously, Nissan announced a large-scale layoff plan in Thailand, expecting to lay off about 1000 employees by next autumn. According to statistics, Nissan's sales in the Thai market in 2023 have decreased by three-quarters compared to 2018. At the same time, Chinese car companies such as BYD, SAIC MG, and Great Wall Motors have rapidly expanded their market share and become strong competitors to Nissan, leveraging the Thai government's subsidy policies for electric vehicle purchases.
In the Chinese market, the market share of Japanese brands has also shrunk. According to data from the Passenger Car Market Information Joint Branch of the China Automobile Dealers Association, as of November this year, Japanese brands had a retail share of 13.7% in the Chinese market. In 2020-2023, the retail shares of Japanese brands were 24.1%, 22.6%, 20%, and 17%, respectively.
Visible Alpha's forecast data shows that by 2026, Nissan and Honda combined will sell nearly 6 million cars. Due to the fact that the key markets of these two companies are basically the same, if they merge, they may be able to reduce expenses in management, procurement, production, and research and development.