Honda and Nissan in Merger Talks, Could Reshape Japan's Auto Industry

The reported merger talks between Honda and Nissan will divide the Japanese car-making industry into two powerful entities, if the plan goes ahead. Neither Honda nor Nissan confirmed plans of a merger, first reported December 17 by the newspaper Nikkei. However, the two companies have already discussed collaboration and in August agreed to work together on software and EVs.

A wide-ranging merger, however, would create an automotive force with a combined sales of over seven million cars, based on last year’s figures for both companies. That would see the new company vying for third place in the global automotive sales charts along with Hyundai Group, which last year sold 7.3 million cars. Mitsubishi could also join the new company according to Nikkei, adding another million and taking the combined entity closer to the Volkswagen Group. Japan is already home to the biggest carmaker in Toyota, which sold 11.2 million cars last year, and which has formed financial and technical alliances with Mazda, Subaru, Suzuki. It also owns Daihatsu. A potential merger would come to the aid of Nissan, whose struggles this year forced it to announce plans for 9000 job cuts and a cut in production capacity by a fifth. Nissan is facing many of the same problems that forced it into an alliance with Renault in 1999. The company’s operating profit dropped 90 percent in the six months to the end of September, dragging it perilously close to its first loss since the Covid crisis in 2020. Honda’s results were much more buoyant for the same period, with profits down 14 percent, but the two companies are facing similar problems and together could pool resources to come up with solutions. Probably the biggest concern weighing both Honda and Nissan is China, once a huge market for both but where buyers are now rapidly turning away from their largely combustion engine line-up towards locally developed EVs and plug-in hybrid

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