Why Are Honda and Nissan Merging: Japan’s two major vehicle manufacturing companies Honda and Nissan have announced their merger. Both companies have set a target to finalize this deal by June 2025.
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Aim of Honda and Nissan Merging
According to the deal, The two companies aim to set up a common holding company for listing in August 2026. That means the world’s third-largest vehicle company will come into existence.
Importance of Honda and Nissan Merging
The automobile industry is currently going through major changes due to tough competition from Chinese companies and their move away from fossil fuels. At such times this merger becomes very important. Both Honda and Nissan have tasted some degree of success in India. But he had to struggle a lot to pursue this success.
5 Reasons Honda and Nissan Merging?
1. Economic Strength: After the merger of Nissan and Honda, it will become the world’s third-largest automobile manufacturer. That means the company formed from the merger will be behind only Toyota and Volkswagen. At the same time, this company can compete with Toyota’s dominance in Japan. Also, the company’s large-scale reach will be able to face the increasing competition in the global market in a better way.
2. China Factors: The popularity of electric and hybrid vehicles is increasing rapidly in China. The market share of Japanese automakers is declining due to Chinese companies like BYD, Xpeng, Nio, and Li Auto. Both Honda and Nissan are seeing their sales decline in China. For this reason, both these companies are planning to reduce their production capacity so that their fixed costs can be reduced in China.
3. Cost-Cutting: Both companies will collaborate on common vehicle platforms and new hybrid and electric cars to reduce costs while maintaining their brands. Apart from this, research and development will also be brought together, so that the development of software and electric vehicles can be accelerated.
4. Nissan’s financial crisis: Nissan has recently faced financial troubles. After announcing its separation from French company Renault, Nissan needs to regain its market scale. Recently, Nissan has announced the elimination of 9,000 jobs and a 20% reduction in its global production capacity. The company also suffered a quarterly loss of 9.3 billion yen (more than $60 million).
5. Coordination between market and technology: Both companies want this merger to be global A new form of synergy between technology and market is being said in the market. Let us tell you that Nissan is strong in the European market, while Honda no longer makes vehicles in Europe. Body-on-frame is Nissan’s specialty, while Honda specializes in making petrol engines.
Apart from this, Honda is new in the battery electric segment, whereas Nissan has been in this sector for a long time. When the company launched the Nissan LEAF about 15 years ago, it was ahead of everyone else, but now it has lagged far behind. With this merger, Nissan can again regain dominance in the EV sector.
Possibility of Becoming a Company Worth Oore Than 50 Billion Dollars
Nissan has a tie-up with France’s Renault SA and Mitsubishi. Based on the market value of the three vehicle manufacturing companies, the merger can create a big company worth more than $50 billion. The alliance of France’s Renault SA and Mitsubishi Motors Corp along with Honda and Nissan will help the company compete with Toyota Motor Corp and Germany’s Volkswagen AG.
Toyota has a technology partnership with Japan’s Mazda Motor Corp and Subaru Corp. In such a situation, even after the merger of Nissan and Honda, Toyota will remain the largest company in Japan. The company had manufactured 1.15 crore vehicles in 2023. On the other hand, Nissan, Honda, and Mitsubishi together will make 80 lakh vehicles. Nissan, Honda, and Mitsubishi announced in August that they would share parts such as batteries for electric vehicles.
Honda and Nissan are reportedly merging to tackle the future of electric vehicles (EVs) and self-driving technology. Here's why:
— Ricky_Media (@Ricky_Media1) December 23, 2024
– EV Competition: Facing stiff competition from Tesla and Chinese manufacturers, a merger could help them catch up and innovate faster in the EV… pic.twitter.com/EMXh4Tecat
The Impact of this Honda and Nissan Merging in India
Both companies have been successful to some extent in India, but they have had to struggle a lot to take it forward. Honda is on top in the mid-level sedan market with the help of the City model. However, the company has failed to break into other segments of the Indian car market.
The company was at the forefront of affordable hybrid technology in India due to the City Hybrid model. Now Maruti Suzuki-Toyota is in control of this sector. Nissan has also had some success with the Magnite mini-SUV model. However, the company has failed to take advantage of this or launch models that can attract customers in the Indian market. This merger can help both companies in the world’s third-largest car market India.
Jay Chavda He is the Founder and Writer of businesspulsecare.com. He is an I.T Engineer, Freelancer, Businessman. He posts Business, Stock/Share Market, Finance Related News and updates on the website. 🔗