Standing on the brink of bankruptcy, Nissan has turned the tide. On December 18th, it was reported that Honda and Nissan have entered into merger negotiations to adapt to rapid global competition. It is reported that Honda and Nissan are considering forming a holding company and are expected to sign a memorandum of understanding in the short term. Meanwhile, the two automotive giants also plan to include Mitsubishi Motors in the holding company system. Currently, Nissan is the largest shareholder of Mitsubishi Motors, holding 24% of its shares.
Both Honda and Nissan have stated that they are exploring various possibilities for future cooperation and fully leveraging each other's strengths. If there is any further information, it will be announced to stakeholders at an appropriate time. Nissan China responded by stating that the merger report was not announced by any of the three companies.
Although neither party has confirmed or falsified the merger rumors, the capital market has responded positively. On December 18th, the Japanese stock market opened with a sharp rise in the stock prices of Nissan and Mitsubishi Motors, with Nissan skyrocketing by 24% at one point, reaching its daily trading limit.
In fact, there have been signs of Honda and Nissan joining forces before. Honda's Executive Vice President, Maki Aoyama, has revealed that Honda is indeed considering various options, and Honda and Nissan are also considering establishing a holding company to integrate their resources and compete with other car companies in the automotive industry.
It is understood that Honda and Nissan are currently cooperating in multiple fields. In March of this year, both parties announced the start of cooperation in electric vehicle batteries and software, planning to jointly explore the next generation of software defined automotive platforms, share resources such as motors and inverters, and jointly develop new batteries and electric shafts; In August, Honda, Nissan, and Mitsubishi signed a memorandum of understanding to jointly explore the potential for cooperation in areas such as vehicle electrification and software development.
In the eyes of the outside world, behind Honda and Nissan's "alliance" is the continuous increase in transformation and market pressure. As the automotive industry enters a period of electrification transformation, the sales of Tesla and Chinese electric vehicle brands are skyrocketing, putting pressure on many traditional automotive giants. Among them, Japanese car companies are facing severe challenges in their operations. Among them, Honda's financial report shows that in the first half of the 2024 fiscal year (April September this year), operating profit increased by 6.6% year-on-year, but the operating profit margin was only 6.9%, and net profit decreased by 19.7% year-on-year. Nissan has been hit even harder. According to the financial report, in the first half of the 2024 fiscal year (April September this year), Nissan's operating profit decreased by as much as 90.2% year-on-year, and its net profit decreased by 93.5% year-on-year. Previously, Nissan announced plans to reduce global production capacity by 20% and lay off 9000 employees worldwide. Meanwhile, there are reports that even if some Mitsubishi Motors shares are sold, Nissan's current cash flow can only support 12-14 months, and the management needs to find investors as soon as possible. In the eyes of the outside world, deepening cooperation with Honda has become one of Nissan's paths to overcome its difficulties.
Yan Jinghui, a member of the Expert Committee of the China Automobile Dealers Association, believes that if Honda and Nissan merge, they will compete with the global sales champion Toyota. At the same time, for Honda and Nissan, the merger can also integrate resources, accelerate corporate transformation, and cope with the pressure brought by external market competition.
It is worth mentioning that if this merger is successful, according to the annual sales of 3.98 million, 3.37 million, and 780000 vehicles respectively of Honda, Nissan, and Mitsubishi, the annual sales scale of the three car companies after the merger will exceed 8 million vehicles, surpassing Hyundai Kia Group and jumping to the third place in the global car sales ranking. This means that this merger will also be the largest acquisition in the automotive industry since the merger of Fiat Chrysler Automobiles and Peugeot Citroen in January 2021 to form Stellantis Group.