Honda and Nissan expected to begin merger talks

 

The emblem of Japanese automaker Nissan Motor is seen at a showroom in Yokohama on May 9, 2024. [AFP]

Honda and Nissan were poised Monday to announce the start of talks on a merger to help the Japanese giants catch up with Chinese rivals and Tesla on electric vehicles.

Their collaboration would create the world's third-largest automaker, expanding the development of EVs and self-driving tech while coming to the rescue of struggling Nissan.

The pair along with Mitsubishi Motors, of which Nissan is a majority shareholder, will address reporters at 5:00 pm (0800 GMT) and are expected to sign a memorandum of understanding on the merger.

Honda and Nissan -- Japan's number two and three automakers after Toyota -- aim to finalise the deal in June 2025 and join forces in 2026, several local media outlets said.

But it's unlikely to be a marriage of equals.

Honda will nominate the president of the new holding company, whose board will be mostly made up of Honda executives, the Nikkei Business Daily reported.

Mitsubishi Motors could join the new holding company early next year, the reports said.

Lacklustre consumer spending and stiff competition in several markets are making life hard for many automakers.

Business has been especially tough for foreign brands in China, where electric vehicle manufacturers such as BYD are leading the way as demand grows for less polluting vehicles.

China overtook Japan as the biggest vehicle exporter last year, helped by government support for EVs.

Nissan profit plunge

Honda and Nissan held separate board meetings on Monday, after informing the industry and transport ministries of their plan to start negotiations, according to Kyodo News.

Honda and Nissan's partnership could include a manufacturing tie-up where they build vehicles at each other's plants, Kyodo added.

"We hope Japanese companies will take steps to respond to these changes and take measures to survive and win amid international competition," top government spokesman Yoshimasa Hayashi said Monday.

He declined to comment on the merger reports but highlighted the "importance of strengthening competitiveness in areas such as... batteries and in-vehicle software".

Debt-laden Nissan last month announced thousands of job cuts as it reported a 93 per cent plunge in first-half net profit, making a merger with Honda welcome news.

Kyodo said Honda would ask Nissan to achieve a "V-shaped recovery" in performance as a condition for the merger.

In the meantime, Taiwanese electronics manufacturer Foxconn has also reportedly sensed an opportunity.

Foxconn, which builds devices for tech companies including Apple's iPhones, first unsuccessfully approached Nissan with a bid to acquire a majority stake, according to Bloomberg.

Then a Taiwanese media outlet said Foxconn's Jun Seki -- a former Nissan executive -- had visited France to ask Renault to sell its 35 per cent share of Nissan, although reports later said this pursuit had been put on pause.

Honda and Nissan already agreed in March to explore a strategic partnership on software and components for EVs among other technologies.

This partnership was joined in August by Mitsubishi Motors, of which Nissan is a majority shareholder.

Nissan has weathered a turbulent decade, including the 2018 arrest of former boss Carlos Ghosn, who later jumped bail and fled Japan concealed in a music equipment box.

Ghosn told reporters in Tokyo on Monday via video link from Lebanon, where he is at large, that turning to its arch-rival Honda showed that Nissan was in "panic mode".

Although the two companies might be able to "find synergies for the future... I don't see anything obvious into this partnership or this alliance", Ghosn said.