Honda Motor Company and Nissan Motor Corporation, two of Japan’s biggest three automakers, have entered into talks regarding a possible merger. This was quite unexpected, despite the news of them entering into a partnership for developing EV technology earlier this year.
The key reason for these automakers discussing a possible merger is to battle the increasing competition that they have been facing from Chinese EV players like BYD. The merger would help them compete better by pooling their resources, technology, as well as experiences.
The situation hasn’t been very pleasant for Nissan in particular in recent times, with the company laying off 9,000 employees and reducing its global production volumes. Sales volumes have also been dropping for Honda amidst tough competition from companies dominating the EV market.
The merger, if it happens, shall also involve Mitsubishi Motors Corporation as Nissan holds a significant stake and decision making power in the former company.
A Honda spokesperson has told AFP, “We are discussing possibilities for cooperation... in a wide range of fields and in various areas, and those possibilities include the latest reports, but there is nothing decided”
A Nissan spokesperson has told AFP, “The content of the report is not something that has been announced by either company... If there are any updates, we will inform our stakeholders at the appropriate time.”
Nissan has been loosening its ties with long-time partner Renault, and Honda has been practising the same with General Motors., which further makes the possibility of the merger stronger.
The two companies are yet to sign a Memorandum of Understanding (MoU) confirming the merger. Also, their stakes in the new holding company are yet to be determined. If they do merge, the way ahead would be paved by aggressive development of electric vehicle technology. The emergent group would also become significantly larger, giving a tough competition to Toyota and Chinese carmakers like BYD.