Nissan Motor Co. CEO Makoto Uchida (left) listens as Honda Motor Co. CEO Toshihiro Mebe (right) attends a joint press conference on March 15, 2024 in Tokyo, Japan.
Tomohiro Ohsumi | Getty Images News | Getty Images
Major Japanese automakers Nissan Motor and Honda Motors It is understood that exploring A Popular fusionsending shock waves through the global auto industry as the two rival companies seek to maintain their global competitiveness. The path to full electricity.
Nissan and Honda plan to enter into negotiations on a merger Japanese business newspaper Nikki This was reported overnight, citing sources close to the matter, indicating that local counterparts expect to sign a memorandum of understanding soon. The two companies will reportedly also look to include Mitsubishi Motors, of which Nissan is the largest shareholder with a 24% stake, in the deal.
The prospective tie-up could create the world's third-largest car group in terms of vehicle sales, with sales of 8 million annually, according to Citi. This would put Nissan, Honda and Mitsubishi behind its fellow Japanese automaker toyota motor And Germany Crisis-stricken Volkswagenrespectively.
In similar statements, Nissan and Honda neither confirmed nor denied the Nikkei report. The newspaper later I mentioned Talks could begin as early as next week.
The merger report comes at a time when many auto giants are struggling to deal with increasing global competition from major electric car manufacturers such as… Tesla And the Chinese company BYD.
Nissan and Honda previously Forged Strategic partnership in March to cooperate in the production of key components of electric vehicles.
However, the mega merger is expected to face several hurdles. Analysts have expressed concerns about the potential for political scrutiny in Japan, given the potential for job cuts if the deal goes ahead, while dismantling Nissan's alliance with the French automaker. Renault It is considered pivotal in this process.
Peter Wells, professor of business and sustainability at Cardiff Business School's Center for Automotive Research, described the reported merger as a “really important” development – one that could help Nissan and Honda pool their assets, save money on costs and create the technologies they need. The need for the future.
“There's been a lot of speculation about Nissan's position over the last 12 months or so. It's been trying to equalize or balance its relationship with Renault, but it's been struggling,” Wells told CNBC.Street signs europe“On Wednesday.
“It was struggling in the market, it was struggling internally, and it didn't have the right product portfolio. There are a lot of warning signs, a lot of red flags around Nissan right now that indicate something has to happen.” He added. “Whether that is the answer is another question.”
Nissan shares rose nearly 24% on Wednesday, outpacing the company's stock Best day trading in at least 40 yearsAccording to data company FactSet. The company's Tokyo-listed share price is still down about 25% year-to-date.
Meanwhile, Honda shares fell more than 3% in New York.
Obstacles to potential merger
Asked whether a Nissan-Honda merger could emerge as a good recourse to combat competition from Chinese electric car makers, Cardiff Business School's Wells said the deal could be described as a “conventional solution.”
“My concerns are that they may be a little late, and that they don't have the current technology and setup (or) the right product to compete in their key markets,” Wells said.
He added: “For Nissan in particular, it is out of touch with the US market. That is its main concern, and it cannot fix that very quickly.”
Employees work on a new energy vehicle assembly line at the factory of Chinese electric vehicle startup Leapmotor on April 1, 2024 in Jinhua, Zhejiang Province, China.
VCG | China Optical Group | Getty Images
JPMorgan's Akira Kishimoto shared similar views on some of the obstacles to a potential Nissan-Honda merger, saying that “the hurdles to overcome will be significant.”
“At a minimum, we believe Nissan needs to clarify where its particularly complex capital relationship with Renault, which includes the French government, will end, as well as provide details on the restructuring proposal it announced,” Kishimoto said in a research note published on Wednesday.
“We believe Honda needs to show how it will manage its major investments in (battery electric vehicles) and batteries in Canada,” Kishimoto said.
JPMorgan said it will now need to wait for any concrete announcements from either company.
“Comprehensive transformation of the automobile industry”
“This connection is not completely unexpected because obviously they announced their partnership earlier this year,” Lucinda Guthrie, executive editor at Mergermarket, told CNBC's “Street Signs Europe” on Wednesday.
” some Reports I've seen a claim that this was a result of Foxconn Make an approach to Nissan. “Now, with this particular deal, I wonder if it will be a solid merger or if it will be more of a partnership,” she added.
apple Vehicle supplier Foxconn has approached Nissan about taking a stake, Bloomberg reported on Wednesday, citing an unnamed source. The Taiwan-based company has invested heavily in electric vehicles in recent years. CNBC has contacted Foxconn for comment.
Echoing the latest developments, Honda recently tested the waters through a partnership with GMbefore He eventually decided to walk away.
Speculation about a merger between Honda and Nissan could follow a similar path, Guthrie said.
“You have to keep in mind that this has to come with the blessing of the Japanese government because there is a possibility of workforce cuts, but then, how will Japanese automakers compete with low-cost cars from China?” Guthrie said.
Nissan signs at a dealership in Richmond, California, US, on Friday, June 21, 2024.
Bloomberg | Bloomberg | Getty Images
Citi's Arifumi Yoshida said the merger would likely have a negative impact on Honda, but a positive impact on Nissan and Mitsubishi.
“Given Honda’s competitiveness in motorcycles and (hybrid electric vehicles) and the strength of its brand, we believe it is positioned to take on competitors over the next five to 10 years,” Yoshida said in a research note published on Wednesday.
However, Yoshida said the decision can be viewed as one made “in anticipation of the overall transformation of the automotive industry.”
— CNBC's Michael Wayland contributed to this report.
