Makoto Uchida, president and CEO of Nissan Motor, and Toshihiro Mibe, Honda Motor president and CEO, attend a joint press conference in Tokyo on March 15, 2024. (Photo: Kyodo via Reuters)
TOKYO – Nissan Motor Co is in talks with its Japanese rival Honda Motor Co to merge, in a deal that would help the ailing company survive, while also creating the world’s third-largest automaker with a better chance of withstanding the industry’s challenges.
One source told Reuters that the two automakers are looking at setting up a holding company, in the clearest sign yet of reorganisation in Japan’s auto industry in response to the immense challenges posed by Tesla and Chinese rivals.
The discussions, first reported by the Nikkei newspaper, would allow the manufacturers to cooperate more closely on technology and help Japan’s second- and third-ranked automakers to create a more formidable domestic rival to Toyota.
In a reflection of Nissan’s vulnerability, discussions between the two appear to have accelerated after Hon Hai Precision Industry Co, the Taiwan-based iPhone maker better known as Foxconn, approached Nissan about taking a stake, a person familiar with the matter said. Foxconn has been investing heavily in factories to build electric vehicles.
Nissan shares jumped 24%, the most ever, while Honda’s stock slipped 3% on Wednesday in response to the news.
Honda’s market capitalisation is about $44 billion, while Nissan’s is about $10 billion after the price surge on Wednesday, meaning a full merger would be bigger than the $52-billion deal between Fiat Chrysler and PSA in 2021 to create Stellantis.
Nissan’s troubles exploded into the headlines in early November, when the company slashed its profit forecast and said it would have to cull 9,000 jobs globally, including about 1,000 in Thailand. It also announced a 20% cut to global output as consumers turn their backs on its lacklustre lineup, leaving Nissan models gathering dust at dealerships.
Since then, various entities have circled the troubled carmaker, with activist investors building up positions in its stock. Even though it makes marginally more cars, Honda’s market value is more than quadruple that of Nissan, giving it the upper hand in merger talks which may have to cover tricky ground like the prospect of layoffs in Japan.
Honda and Nissan have increased ties in recent months as they wrestle with the changing electric vehicle landscape. As well as heavy competition, autom
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