Makoto Uchida (L), president and CEO of Japanese automaker Nissan, shakes hands with Toshihiro Mibe (R), director, president and chief executive officer of Honda, after a news conference in Tokyo on 1 August 2024.
Richard A. Brooks | Afp | Getty Images
Nissan motor shares rose on Wednesday after a media report which the struggling Japanese automaker is looking to join him Honda Motorscreating a larger entity that can compete with larger rivals and invest more in the growing market for electric vehicles.
Nissan shares were last traded up by 22%, while Honda shares slipped by 1.6%.
Honda and Nissan are considering working under a holding company, and will soon sign a memorandum of understanding, according to a report in the Nikkei newspaper. They also look to take last Mitsubishi Motorsin which Nissan is the main shareholder with a 24% stake, under the holding company, according to the report.
The merger, if successful, will be particularly beneficial for Nissan, which had previously announced plans cut 9,000 jobs and cut global production capacity by a fifth amid fierce competition in its key markets.
Joe McCabe, president and CEO of AutoForecast Solutions, told CNBC on Wednesday that Nissan needs a “revitalization” after its relationship with Renault went to the side.
“They (Nissan) did not have a leadership position in any of the categories in which they competed,” he said.
In a statement, Nissan said that media reports that it is “considering a business integration” with Honda are not based on information from the company. Nissan said that they are considering various possibilities for cooperation with Honda and Mitsubishi in the future, but no decisions have been made. Sections of Mitsubishi were last increased by 14%.
The Nissan-Honda-Mitsubishi venture would equate to more than 8 million car sales annually, according to Nikkei. That would put the company among the world's largest automakers, but still under the Japanese auto buyer conglomerate Toyota motorat 11.2 million in 2023, as well as a German automaker Volkswagenwhich reported last year's sales 9.2 million vehicles.
The merger report follows the two Japanese automakers entering into a strategic partnership earlier this year on shared automotive components and software.
Such a tie-up would be the largest auto industry merger since Fiat Chrysler merged with France-based PSA Groupe to create Stellar in January 2021.
The global automotive industry is facing a number of challenges including the transition to EVs, a sector dominated by Tesla and BYD in China. Volkswagenfor example, plans to close factories and cut thousands of jobs in Germany, while General Motors recently pulled the plug on Cruise, his self-driving robotaxi company.
For Honda and Nissan, there is also the risk of tariffs being proposed by President-elect Donald Trump that could require a major reorganization of global supply chains.
– Michael Wayland and Kevin Lim contributed to this report.
