This week, executives from Japan’s largest automakers, Honda (HMC +1.34%), Nissan, and Mitsubishi held a press conference in Tokyo to reveal a new merger that aims to be completed by 2026. The agreement would see Honda, the nation’s top car manufacturer, effectively take control of Nissan as the first step. However, Mitsubishi hasn’t announced full participation yet. Here’s what you need to know.
Honda Nissan Merger – A Major Reshaping of the Industry
This merger would be one of the largest corporate reshuffles in automotive history and would create the third-largest auto group in the world, following Toyota and Volkswagen. Executives believe this maneuver is necessary to protect the Japanese auto industry against rising competition, shifting consumer interests, and a push towards EVs. The new conglomerate has projected combined sales of +$191B yearly.
Terms of the Honda Nissan Merger
While much of the details of the merger remain to be negotiated, there are some tidbits of info that the public received. For one, the merger would see Honda take over Nissan’s management. However, the agreement states that both brands would remain separate and retain their core principles. What that means in practice is yet to be seen.
Share Resources
One of the key benefits of the merger is that the manufacturers will now be able to share resources. This approach will improve innovations, reduce costs, and drive cooperation in the market. To start off, the firms have agreed to cooperate on a software platform and EV designs. This cooperation demonstrates the group’s desire to remain competitive in the fast-changing market.
Scale
The merger will allow both companies to scale up their EV production lines to compete with China. The sharing of resources will allow manufacturers to create new vehicles that leverage the best aspects of both platforms. This strategy should reduce costs and improve quality.
New Honda Nissan Merger Auto Group
The Honda Nissan auto group will have a market cap of $55B. Interstingly, Honda and Nissan executives agreed to complete negotiations by June 2025. Next, a holding company will launch as both automakers delist their current shares.
Mitsubishi
So far, only Nissan and Honda have inked a deal, with Mitsubishi Motors delaying its commitment until January. Notably, Mitsubishi Motors has over 50 years in the global auto market and would push the auto group’s projected yearly sales for 2025 to +8M vehicles.
Why Do the Japanese Automakers Want to Merge Now?
There are several reasons why Japanese automakers see now as the ideal time to merge. For one, they are facing stiff competition from Chinese automakers. China is the world’s largest EV manufacturer with +31% of the market share and growing. The Chinese EV market has a projected CAGR of 15.6% and revenue of $100B by 2028.
Impressively, local manufacturers control 80% of the massive Chinese market and enjoy full government support. These factors have led Japanese automakers to worry that they need to go into high gear or risk being left behind in the new auto market. As such, Honda CEO Toshihiro Mibe stressed that the merger shouldn’t be viewed as Honda bailing out Nissan, but rather a coming together of the manufacturers to bolster their market positioning and capabilities.
Source – theicct
Mibe then spoke on how Nissan must turn around its low sales as part of the agreement. Nissan has suffered from lackluster sales and consumer enthusiasm over the last 5 years. Sadly, the company recently announced massive layoffs as part of its strategy to reduce losses. Specifically, 9,000 jobs will be eliminated, representing a 6.7% decrease in its overall workforce.
Mibe went on to discuss how Japanese automakers need to make these changes to remain competitive in 2030. He described how Chinese automakers managed to beat traditional automakers to the mainstream EV market, despite Nissan offering the first electric vehicle, and how their offerings are becoming more well-received by the public.
Issues with the Honda Nissan Merger to be Addressed
There are several issues that a merger of this size must address. For one, there are no specifics in regard to how the companies are going to maintain their brands while sharing resources, management, and other vital aspects of the manufacturing process.
More Cuts Coming
Another issue that the two must contend with is the large number of duplicate positions that will need to be removed. Large portions of both companies will have to be merged and trimmed down to ensure the best quality and talented individuals drive innovation for the group moving forward.
Culture Clashes
Another concern that has some worried is the potential for culture clashes. Honda and Nissan have long and celebrated histories. As such, some speculate the merger could result in some headbutting. Carlos Ghosn, Nissan’s former CEO and now wanted man, spoke about the potential for companies not to see eye to eye. He stated that these differences could pose a major issue if not resolved immediately.
Honda and Nissan – True Automotive Innovators
The automotive industry would not be what it is today if these manufacturers had never existed. Both have provided the car community with timeless classics that still bring joy to people’s faces, alongside reliable daily drivers and family vehicles. Here’s some background on how these manufacturers pioneered new tech that changed cars for the better.
Honda Innovations
Honda entered the market in 1946 as the brainchild of Soichiro Honda. The company quickly saw success after creating its first in-house motor. Today, it’s the largest auto manufacturer in Japan and one of the most recognized brands globally. Honda’s pioneering spirit has been present since its earliest days.
Honda Motor Co., Ltd. (HMC +1.34%)
Vtec
In the mid-1980s, Honda introduced Variable Valve Timing and Lift Electronic Control (Vtec). Vtech provided much better performance for their vehicle, allowing the motor to alter the valve performance to meet the driving scenario. This capability helps Hondas achieve better efficiency and power while reducing weight.
Hydrogen Fuel Cell
In 2008, Honda introduced the world to the first zero-emission hydrogen fuel cell-powered vehicles. The CX Clarity was produced from 2008-2014. It features a single-speed transmission, a custom hydrogen fuel cell, and a range of 240 mi.
Four Wheel Steering
Honda reshaped the automotive industry again with the introduction of 4-wheel steering. The 1987 Prelude was the first car to integrate this performance feature, giving the vehicle exceptional handling around tight curves. The vehicle utilized a slider that connected to the rear tie rods, allowing for a 2.5-degree turn radius of the rear tires.
Hybrid
The 2000 Honda Insight was another pioneering effort to launch Honda into the future auto market. The Insight was the first gas-electric hybrid to hit the market. The car utilized Honda’s Integrated Motor Assist (IMA) technology to seamlessly combine the combustion and electric motor operations.
Manufacturing
Honda also led the way in manufacturing innovations throughout its history. For example, it was the first to use environmentally friendly waterborne basecoat paint on its vehicles. Additionally, it was the first automotive manufacturer to utilize wind turbines to supplement power. Specifically, the Ohio manufacturing plant has a windmill field located adjacent to it, providing power.
Nissan
Nissan entered the market in 1933 and quickly grew to become the second-largest auto manufacturer in the country. The company produced epic sports cars in the 90s and was a favorite among car culture enthusiasts. Today, it remains a popular brand with iconic vehicles. However, slumping sales have left the company with a hard decision to make across its production facilities located in Japan, North America, South America, Asia, Africa, Europe, and Oceania.
Nissan Innovations
Like Honda, Nissan never slouched on innovation. The company introduced several technologies that became standard on all vehicles. This forward-looking stance drove Nissan to become a leading brand throughout the 1990s and a pioneer that was often a little ahead of its time in many instances.
Nissan Leaf
The Nissan Leaf was the first commercially available mass-produced electric vehicle. It entered the market in 2010 with a range of 73 miles, which increased to 226 miles in 2017. Notably, major battery upgrades provide the additional power required. The Leaf features fast charging, NissanConnect services for remote monitoring, and a reliable front wheel design.
Satellite Navigation
The 1990s saw the first vehicles equipped with satellite navigation systems. Nissan was the first manufacturer to introduce this game-changing feature into its cars. Today, nearly all new vehicles come with some form of GPS system or the capability to work with your phone’s options. However, in the mid-1990s, this was a monumental task that required Nissan engineers to think outside the box.
Cruise Control
That’s right. Nissan was the first manufacturer to add cruise control to their vehicles way back in the 1960s. Cruise control allows drivers to maintain a certain speed while on the highway. For those taking long trips, it can reduce fatigue and improve comfort. As such, when Nissan introduced this option, it was a huge upgrade that competitors quickly copied.
Honda Nissan Merger – Future Plans and Technologies
Given their innovative history, there is no reason to think that either company will abandon its approach in the future. Both manufacturers have some game-changing tech under development that could help Japanese automakers compete with their neighbors. Here’s some of the future tech that these companies have in the works.
Go All Electric
Honda plans to switch its product line to 100% Evs by 2040. This maneuver will allow the company to reduce its environmental impact. As part of this strategy, the company foresees a mix of EV and fuel cell-powered vehicles replacing their combustion option.
Nissan shares the desire to create a cleaner environment. It has listed goals to achieve full carbon neutrality by 2050. As part of this approach, the company will expand its EV models to offer 27 options in the coming years. Powering these vehicles will be Nissan’s new All-Solid-State Battery (ASSB), which will improve performance, lower weight, and provide faster charging times compared to today’s standards.
Autonomous Vehicles
Honda started work on its autonomous work vehicles program years ago. This program revolves around durable off-road capable worksite vehicles that can be set up to complete repetitive tasks often required on job sites, like delivering material or removing items. Honda envisions these vehicles, making the job sites of the future safer and more efficient.
Nissan has two autonomous driving programs in the works, the roPILOT and ProPILOT Park. These systems will enhance autonomous driving for Nissan owners, allowing them to focus on other tasks while their vehicle navigates the congested streets to get them to their appointments on time.
Personal Travel
Honda has ventured into the personal travel sector with its Micro Commuter concept. This small 2-wheel electric vehicle is a single-seater, offering an affordable and reliable way to get around town. Honda sees a future where this style of personal transport is more practical in urban environments versus owning a vehicle.
Ridesharing
Interestingly, Nissan plans to venture into the ride-sharing market in the future. The company wants to offer more transportation options to the market, including self-driving taxis.
Honda Nissan Merger – IS it a Good Thing?
The Honda-Nissan Merger can be looked at as a good or bad thing, depending on your stance. For long-time Nissan and Honda enthusiasts, there is a risk of the brands being dismantled and never returning to glory. However, for those in the industry, the prospect of a new Japanese auto group opens the door to exciting investment opportunities. For now, the first steps of the merger are underway as the market watches patiently.
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