The move is aimed at surviving the rapidly changing global market amid growing threats from Chinese electric carmakers including Tesla and BYD. The move aims to become the world’s third largest carmaker by banking on the move.
The Nihon Keizai Shimbun reported on Wednesday that Honda and Nissan will likely be merged into a holding company to independently operate their respective brands. Honda and Nissan will sign a memorandum of understanding soon and confirm their stakes and other details. Nissan Motor Co., the largest shareholder of Nissan, will be added to the holding company in the future. When the three companies are merged, a “car giant” will be created, which will surpass 8 million units sold annually.
In particular, the merger discussion is drawing attention as it comes amid a strong offensive by Tesla and Chinese electric car makers in the global automobile market. Honda and Nissan have reportedly been discussing cooperation under the water since March. In August, it also unveiled strategic partnerships related to software and electric vehicle infrastructure.
“The rise of Chinese companies with excellent price competitiveness shook the foundations of Japanese companies in China and Southeast Asia,” Nikkei said. “Nissan is struggling to sell not only in China but also in the U.S..” Nissan, which is undergoing massive restructuring due to financial difficulties, reportedly decided that a merger with Honda would be inevitable to make a leap forward.
The media also noted that U.S. General Motors (GM) is working with Hyundai Motor to establish a “new framework” in the global automobile market, including cooperation in electric vehicles and software. In September, BMW announced cooperation with Toyota and Rivian with Volkswagen.
Moreover, the Japanese automobile industry is also facing uncertainties following the inauguration of U.S. President-elect Donald Trump in January next year. There is a great concern that cars, one of the largest exports, could be a target in the process of Trump, who has claimed to be a “tariff man,” pressuring Japan, which has a trade surplus with the U.S. Earlier, Nissan and Mitsubishi also announced that their operating profit would fall by double digits next year from this year.
JULIE KIM
US ASIA JOURNAL
