Two major car manufacturers ‘in talks’ over potential merger to create largest electric vehicle company
Japanese automotive giants Honda and Nissan are in talks over a potential merger that could create a £54billion company, making it one of the largest in the world.
The move comes as both firms face mounting pressure from Tesla and Chinese rivals to ramp up production in the electric vehicle market.
The discussions, revealed today by Reuters, mark a significant shift in Japan’s automotive landscape and include exploring ways to deepen existing ties between the two manufacturers.
The companies are also considering various options, including the possibility of setting up a holding company, according to sources familiar with the matter.
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The potential merger would represent one of the largest automotive deals since the £52billion merger between Fiat Chrysler and PSA in 2021.
A combined Honda and Nissan would create the world’s third-largest automotive group by vehicle sales, trailing only Toyota and Volkswagen.
The merged entity would have an annual output of 7.4 million vehicles, surpassing the current third-place holder, South Korea’s Hyundai and Kia group, which reported 7.31 million vehicles last year.
Honda sold 3.98 million vehicles globally in 2023, while Nissan’s sales reached 3.37 million vehicles.
Honda aims to boost its electric vehicle production to more than two million units annually by 2030, targeting 40 per cent of new car sales to be EVs and fuel cell vehicles.
The company recently announced an additional target to sell 1.3 million hybrid vehicles annually by 2030, doubling its 2023 levels, as hybrid cars gain popularity in North America.
Nissan, which pioneered mass-market electric vehicles with the Leaf in 2010, has set its sights on EVs and hybrids comprising 60 per cent of its global sales by 2030. By 2040, Honda plans to exclusively sell electric and fuel cell vehicles.
Taiwan’s Foxconn, known for manufacturing Apple’s iPhones, made an approach to take a controlling stake in Nissan, but the Japanese automaker rejected the bid, according to sources familiar with the matter.
Nissan’s recent financial struggles have added urgency to the cooperation talks, following an 85 per cent plunge in second-quarter profit due to slumping sales in China and the US.
Last month, the company announced a £2.6billion cost savings plan that includes cutting 9,000 jobs and reducing its global production capacity by 20 per cent.
“This deal appears to be more about bailing out Nissan, but Honda itself is not resting on its laurels, Honda’s cash flow is set to deteriorate next year and its EVs haven’t been going so well,” said Sanshiro Fukao, executive fellow at Itochu Research Institute.
The three Japanese automakers are expected to hold a joint news conference in Tokyo next Monday to discuss potential collaboration.
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However, any potential merger between Honda and Nissan would face significant scrutiny in the US, where both companies maintain production facilities in Mexico for export to the American market.
The companies would also need to navigate their distinct corporate cultures, with Honda known for its technology-centric approach and unique corporate philosophy.