Nissan Motor Corp. and Honda Motor Co. confirmed that they are in talks to explore a closer collaboration, though they have denied reports suggesting that a merger decision has been made.
The news of potential merger talks caused a significant spike in Nissan’s share price, which jumped by more than 22% in Tokyo. However, Honda’s stock saw a decline, falling as much as 3%. Speculation had suggested that a merger between the two companies could create a massive automaker worth approximately $55 billion based on current market valuations. Such a deal would help both companies gain the scale needed to better compete with Japan’s top automaker, Toyota, and Germany’s Volkswagen Group.
Currently, Nissan is in an alliance with Renault SA, though that relationship is under review. The company announced plans last month to reduce its global workforce by about 6%, shedding 9,000 jobs, and also cut global production capacity by 20%. This restructuring follows a quarterly loss of 9.3 billion yen ($61 million). Earlier this month, Nissan reshuffled its management, with CEO Makoto Uchida taking a 50% pay cut as part of the company’s efforts to address financial challenges. Uchida has emphasised the need for Nissan to become more efficient and to better align with market demands, rising costs, and shifting global trends.
On the other hand, Honda has also been facing challenges, reporting a nearly 20% drop in profits for the first half of the April-March fiscal year, mainly due to weak sales in China. The automotive industry as a whole is undergoing a transformation, with the rise of Chinese automakers adding pressure, while companies also face the challenge of transitioning from traditional petrol-powered vehicles to electric ones.
In terms of production figures, Toyota remained the leader in 2023, with 11.5 million vehicles made. Honda produced 4.2 million cars, while Nissan made 3.4 million. Mitsubishi Motors followed with just over 1 million vehicles. Even if a merger between Nissan and Honda were to happen, Toyota would still hold the title as Japan’s largest automaker.
