Renault races to Paris with possible Honda-Nissan wedding, automotive in turmoil

(Il Sole 24 Ore Radiocor) - Thepossible nuptials between Honda and Nissan in Japan are heating up the engines of the automotive sector. On the Tokyo Stock Exchange (-0.72% at close) shares of the Micra maker rose 23.7% to an all-time high of 417.6 yen ($2.72) after being suspended from trading early in the session, while Honda lost 3.1%. The rumour, circulated yesterday evening by the Nikkei newspaper, saw partial confirmation on the deal come this morning from Honda, which - to Afp - said the transaction is 'among the possibilities', but that 'nothing has been decided'. The two groups 'are exploring various possibilities for collaboration, to exploit their respective strengths', Nissan replied. And so in Paris (CAC 40 ) shines Renault , which has a 22% stake in Nissan.

In detail, according to press rumours, Honda is exploring the possibility of a merger with its struggling compatriot Nissan in order to better compete with Tesla and Chinese companies in the electric sector. The deal between the two companies - Japan's second and third largest after Toyota, respectively - could be the biggest in the auto industry since the $52 billion merger between Fiat Chrysler and Psa in 2021, which created Stellantis. According to Nikkei, the shares of the two companies in the new entity, along with other details, will be decided later.In any case, according to Jefferies, the eventual merger could benefit Renault. It would accelerate the unravelling of the historic alliance between Nissan and the French carmaker, which has been gradually reducing its stake in the Japanese group since last year. The group led by Luca de Meo, after the sale of a block of shares amounting to around 5% in September, has already dropped from 40.42% (share as of December 2023) to 22.73% in the Japanese company's capital.

Nissan had opposed a merger with Renault, but a marriage with Honda "could be considered more balanced and fair", Bloomberg Intelligence analyst Tatsuo Yoshida told AFP. For Nissan, he added, "a merger would provide a short-term respite" from the severe financial pressure: the group announced in early November that it would cut 9,000 jobs globally and slash its production capacity in the face of plummeting sales, especially in China, in the face of competition from local electric brands.

Meanwhile, in Milan (FTSE MIB ) investors are studying the effects of the news on Stellantis as well, which add to the implications of the pact struck yesterday with the government.