According to a report by Nikkei Asia, Japanese automakers Honda, Nissan, and Mitsubishi are exploring a merger that could reshape the global automotive industry. If the merger materialises, the three companies will operate under a single holding company, pooling their resources to remain competitive in the rapidly evolving electric vehicle (EV) market.
Competing Against Global EV Giants
The combined annual car sales of Honda, Nissan, and Mitsubishi—which is partly owned by Nissan—would total 8 million units, making them the third-largest automaker globally, surpassing Hyundai-Kia and trailing only Toyota and Volkswagen Group. This consolidation aims to bolster their ability to compete against dominant players like Tesla and the rapidly growing Chinese EV brands, including BYD, which are gaining ground with strong government support.
The EV market is expanding at an unprecedented pace, with new energy vehicles (including petrol-electric hybrids) expected to account for 40% of vehicle sales in China this year. The emergence of ambitious Chinese automakers has posed a significant challenge to Japanese brands in China and Southeast Asia, prompting Honda and Nissan to consider this bold move.
Strategic Collaboration and Synergy
Discussions on the merger began in March 2023, with Honda and Nissan entering a strategic partnership in August to share automotive components and software. By combining their technological and manufacturing capabilities, the three automakers aim to strengthen their foothold in the global market and accelerate EV production to meet growing demand.
Facing Industry Challenges
The merger talks come amid significant restructuring within Honda and Nissan. Honda recently announced a 10% reduction in its global production capacity, equivalent to half a million units, while Nissan has reduced its production capacity by 20% and cut nearly 10% of its global workforce. These measures reflect the shifting landscape of the automotive industry as traditional automakers face growing pressure to adapt to the EV era.
By uniting their resources, Honda, Nissan, and Mitsubishi hope to overcome these challenges and create a more competitive entity capable of driving innovation and maintaining relevance in the face of global competition.
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