Honda and Nissan in merger talks: would be the third global group
Japan's second and third largest manufacturers are trying to cope with the Chinese in electrics. The Yokohama-based manufacturer recently launched drastic cuts
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Key points
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Four years after the marriage between Fca and Psa, which gave birth to Stellantis, Honda and Nissan have reportedly begun negotiations to intensify their relationship, leading to another historic merger, as first reported on Tuesday 17 December by the Nikkei newspaper. The two automakers, Japan's second and third largest respectively, are exploring the option of operating under a new holding company. The signing of a memorandum of understanding would be imminent, perhaps the announcement could come as early as 23 December.
The plans of the two companies could also include the inclusion of Mitsubishi Motors, a company in which Nissan is already the main shareholder, with 24% of the shares. The merger would create a super group: 7.4 million cars produced per year (without Mitsubishi, which would add another 1.1 million), third after Toyota and Volkswagen. Overnight it emerged that there had in fact also been an interest from Taiwanese Foxconn for Nissan, which was rejected, hence the acceleration in talks between the two Japanese manufacturers.
An operation of this magnitude, however, entails considerable challenges. One of the first difficulties will be defining the control shares within the new structure and managing governance, considering the cultural differences between the two companies. In parallel, it will be crucial to integrate the respective production chains and technology platforms. Recently, the former CEO of Nissan, Carlos Ghosn, a controversial figure who was arrested in 2018 for financial fraud and subsequently fled to Lebanon, had revealed that an eventual merger between Honda and Nissan would be a de facto takeover by Honda.
Nissan's stock traded in New York (in the form of Adr, these are financial instruments that represent shares in a foreign company and are tradable in the US) rallied on Tuesday, closing the session at +11.4%. Honda gained 1%. On the Tokyo Stock Exchange in the last few hours, Nissan gained as much as 24% while Honda lost 3%.
Gathering forces to survive
.The decision by Honda and Nissan, anticipated in March by agreements for the synergetic production of electric cars and in August for the development of battery technologies, comes against a background of unprecedented crisis and radical transformation in the automotive sector. The meteoric growth of Chinese manufacturers is putting traditional manufacturers under pressure, imposing development rhythms that even the big Japanese are struggling to sustain, despite cost cuts. Nissan, in particular, while its former ally Renault, whose stock is racing on the stock market, is gradually selling off its shareholding, is going through an almost dramatic phase: a few weeks ago, CEO Makoto Uchida announced a $2.6 billion contingency plan, which envisages cutting 9,000 jobs, a 20% reduction in global production capacity and a complete overhaul of business models.
