Honda and Nissan are planning to merge in an effort to compete against the growing influence of the Chinese car industry.
This merger would create one of the largest car producers in the world, joining the ranks of Toyota, Volkswagen, General Motors, and Ford.
The potential multibillion dollar deal is aimed at countering the “rise of Chinese power,” as stated by Honda’s CEO, Toshihiro Mibe.
Mr. Mibe emphasized the need to implement a strategy to combat this by 2030, or risk being overtaken by competitors.
The proposed merger, which would include Mitsubishi due to Nissan’s majority shareholding, would allow the companies to pool resources to compete against other electric vehicle manufacturers like Tesla.
The Chinese electric car market, dominated by brands like BYD, poses a significant threat to traditional car manufacturers globally.
Mr. Mibe highlighted the shift in the automobile industry structure due to the emergence of Chinese power and other market forces.
Intense competition in China has made it challenging for foreign car makers to compete, given the lower costs and pricing advantages of local firms.
This has led to China becoming the largest producer of electric vehicles globally.
In response to this, the EU has imposed tariffs on Chinese EV imports, raising concerns about potential price increases for consumers.
The combined sales of Nissan and Honda exceed $191bn (£152bn), according to Nissan’s CEO, Makoto Uchida.
Earlier this year, the two Japanese automakers agreed to explore a strategic partnership focused on electric vehicles.
Mr. Mibe underscored the necessity of building capabilities to compete against emerging forces by 2030, emphasizing that the merger is not a bailout for Nissan.
Nissan announced job cuts as part of global production reductions to address declining sales in China and the US.
Nissan’s struggles in recent years, following the arrest of former CEO Carlos Ghosn, have prompted efforts to regain stability in the market.
Mr. Ghosn’s escape from Japan and subsequent accusations of financial misconduct have added to the challenges facing Nissan.
Mr. Ghosn, currently in Lebanon, criticized Nissan’s merger plans as a sign of desperation.
Honda and Nissan’s collaboration in the EV sector has deepened over time, with a focus on technology advancements.
However, the potential merger is expected to undergo thorough review due to possible job implications and the impact on Nissan’s alliance with Renault.