- Honda and Nissan face competition from Tesla and Chinese EV makers - Merger would create $54 billion company, world's No 3 auto group by vehicle sales - Honda, Nissan also exploring ways to cooperate with Mitsubishi-source
Honda and Nissan are in talks to deepen ties, two people said on Wednesday, including a possible merger, the clearest sign yet of how Japan’s once seemingly unbeatable auto industry is being reshaped by challenges from Tesla and Chinese rivals.
A combined Honda and Nissan would create a $54 billion company with annual output of 7.4 million vehicles, making it the world’s third-largest auto group by vehicle sales after Toyota and Volkswagen
The two firms already forged a strategic partnership in March to cooperate in electric vehicle development, but Nissan’s deepening financial and strategic trouble in recent months has added more urgency for closer cooperation with larger rival Honda.
Nissan announced a $2.6 billion cost savings plan last month that includes cutting 9,000 jobs and 20% of its global production capacity, as slumping sales in China and the United States led to an 85% plunge in second-quarter profit.
The automakers have been grappling with challenges from EV makers, particularly in China, where BYD, and others have surged ahead.
The talks between Honda and Nissan, first reported by the Nikkei newspaper, could allow the companies to cooperate more on technology and help them create a more formidable domestic rival to Toyota.
The discussions are focused on finding ways to bolster collaboration and include the possibility of setting up a holding company, said the people, who declined to be identified because the information has not been made public.
The companies are also discussing the possibility of a full merger, according to one of the people, as well as looking at ways to cooperate with Mitsubishi.
Honda, Nissan and Mitsubishi said no deal had been announced by any of the companies, though Nissan and Mitsubishi noted the three automakers had said previously they were considering opportunities for future collaboration.
French automaker Renault, a major Nissan shareholder, said it had no information and declined to comment.
EVOLVING LANDSCAPE
Over the past year, an EV price war launched by Tesla and BYD has intensified pressure on any automakers losing money on the next-generation vehicles. That has put pushed companies like Honda and Nissan to seek ways to cut costs and speed vehicle development, and mergers are a major step in that direction.
Any merger would face significant U.S. scrutiny and President-elect Donald Trump has vowed to take a hard line on imported vehicles, including threatening 25% tariffs on vehicles shipped from Canada and Mexico. He could seek concessions from Honda and Nissan to approve any deal, auto industry officials said.
Honda and Nissan both produce cars in Mexico for export to the U.S.
Honda and Nissan would also have to work out how to integrate their different corporate cultures if they proceed with a merger, according to analysts.
