Japanese automakers\u00a0Nissan\u00a0and\u00a0Honda\u00a0on Monday announced they had entered into\u00a0official talks to merge and\u00a0create the world\u2019s third-largest automaker by sales.<\/p>\n
In a news conference on Monday, Honda CEO Toshihiro Mibe said the companies needed greater scale to compete in the development of new technologies in electric vehicles and intelligent driving. A business integration would give the companies an \u201cedge that will not be possible under the current collaboration framework,\u201d Mibe said, according to a translation.<\/p>\n
The deal would aim to share intelligence and resources and deliver economies of scale and synergies while protecting both brands, he said.<\/p>\n
A holding company would be formed as the parent company of both Honda and Nissan, listed on the Tokyo Stock Exchange. The larger Honda will nominate most of the integrated entity\u2019s board members. The merged group has the potential to deliver revenue of 30 trillion yen ($191.4 billion) and operating profit of more than 3 trillion yen, he said.<\/p>\n
Honda\u00a0reported\u00a01.382 trillion yen in operating profit for the full year to March 2024, versus Nissan\u2019s 568.7 billion yen. The companies would have a combined value of nearly $54 billion, with Honda\u2019s market capitalization contributing the greater $43 billion share.<\/p>\n
Discussions are set to conclude in June 2025.<\/p>\n
Mibe added that if approved, the integration would be a mid- to long-term project that is currently not expected to show visible progress until 2030 and beyond.<\/p>\n
Nissan\u2019s strategic partner, Mitsubishi, has been offered the chance to join the new group and will take a decision by the end of January 2025.<\/p>\n
The companies are grappling with intense global competition in the EV market from the likes of\u00a0Tesla\u00a0and China\u2019s BYD. The high cost of the EV transition for legacy companies has long been\u00a0expected to drive industry consolidation.<\/p>\n
Japan\u2019s\u00a0Toyota\u00a0is the world\u2019s biggest automaker by sales, followed by Germany\u2019s\u00a0Volkswagen. A Nissan-Honda tie-up would see the group overtake South Korea\u2019s Hyundai.<\/p>\n
The proposed deal was\u00a0first reported by Japan\u2019s Nikkei newspaper\u00a0on Dec. 17.<\/p>\n
Nissan shares spiked after the initial report of a merger. Analysts\u00a0say the potential tie-up\u00a0is a result of\u00a0financial underperformance\u00a0at the company and of the\u00a0restructure of its long-standing partnership\u00a0with France\u2019s\u00a0Renault.<\/p>\n
In its most recent quarterly results, Nissan\u00a0said\u00a0it would cut 9,000 jobs and reduce global production capacity by a fifth.<\/p>\n
Honda CEO Mibe on Monday said some of the company\u2019s shareholders may feel that the deal would represent Honda supporting Nissan, but noted the merger was \u201cbased on the assumption that Nissan completes its turnaround action.\u201d<\/p>\n
\u201cIf Nissan and Honda fail to stand on their own feet the business integration talks will not come to fruition,\u201d he said.<\/p>\n
Nissan CEO Makoto Uchida told reporters that the discussion of integration did \u201cnot mean we have given up on a turnaround\u201d and was instead about ensuring the company\u2019s competitiveness for the future.<\/p>\n
\u201cAfter doing this turnaround action for future development, future growth, we need to look at ultimate size and growth. This growth will be through partnerships,\u201d he added.<\/p>\n
Nissan has \u201cbeen struggling in the market, it\u2019s been struggling at home, it doesn\u2019t have the right product lineup,\u201d Peter Wells, professor of business and sustainability at Cardiff Business School\u2019s Centre for Automotive Industry Research, told CNBC\u2019s \u201cStreet Signs Europe\u201d last week.<\/p>\n
\u201cThere are so many warning signs, so many red flags around Nissan at the moment that something had to happen. Whether this is the answer is another question,\u201d Wells added.<\/p>\n
Shares of Renault closed 1.2% higher on Monday. The company directly holds a\u00a017% stake\u00a0in Nissan and owns another 18.7% via a French trust, while Nissan is a strategic investor in Renault\u2019s EV and software entity Ampere.<\/p>\n
In Asia trade, Nissan shares closed 1.2% higher ahead of the announcement, with Honda up 3.8% and Mitsubishi finishing 0.6% higher.<\/p>\n
\u2014 CNBC\u2019s Ruxandra Iordache and Sam Meredith contributed to this story.<\/em><\/p>\n<\/p>\n Japanese automakers\u00a0Nissan\u00a0and\u00a0Honda\u00a0on Monday announced they had entered into\u00a0official talks to merge and\u00a0create the world\u2019s third-largest automaker by sales. In a news conference on Monday, Honda CEO Toshihiro Mibe said the companies needed greater scale to compete in the development of new technologies in electric vehicles and intelligent driving. A business integration would give the companies […]<\/p>\n","protected":false},"author":0,"featured_media":13465,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-13464","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/13464","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=13464"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/13464\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/13465"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=13464"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=13464"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=13464"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}