Honda and Nissan to Explore Merger, Targeting Synergies and EV Dominance

Makoto Uchida, president and CEO of Nissan Motor, and Toshihiro Mibe, Honda Motor president and CEO, attend a joint press conference in Tokyo, Japan, on March 15, 2024TOKYO- Honda and Nissan expect big benefits from their potential merger to create the world's third-largest auto group but intense competition from China raises questions about whether they can make it work in time.

But the full effect of synergies is not likely to be felt until after 2030, Honda CEO Toshihiro Mibe told a joint press conference on Monday. The companies need to build up capabilities to take on Chinese rivals by then, he said, or face being "beaten".The biggest immediate hurdle for both may be their model line-up. Neither are particularly strong in EVs. Nissan, although an early pioneer with the Leaf, later stumbled.

A standardised vehicle platform would produce cost synergies, but that, too, would take time to develop.In China, the shift to electrified cars has seen consumer interest focus on software-driven features and the digital experience inside the car, areas where the Chinese makers excel. Turning around their sizable China operations will entail "significant execution risk", Dean Enjo, a senior analyst at Moody's Ratings, wrote in a note to clients.

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