Honda and Nissan are facing mounting challenges as their global sales either stagnated or declined in 2024, highlighting the urgent need for strategic collaboration. Honda’s vehicle sales dipped by 4.6% to 3.8 million units, while Nissan saw a smaller 0.8% drop to 3.3 million. Their struggles come at a time when Chinese automaker BYD has surged ahead, selling 4.3 million cars in the same period. To counter this trend, the two Japanese companies announced plans in December to merge under a single holding company, potentially creating a new industry powerhouse. If Mitsubishi Motors joins the alliance, the combined entity could reach annual sales of 8 million vehicles, positioning itself closer to Toyota and Volkswagen.
Despite the promising numbers, significant hurdles remain before the merger becomes a reality. Nissan’s ongoing financial struggles raise concerns, with Honda emphasizing the need for stability before finalizing any deal. Nissan’s cost-cutting initiatives, including work shift reductions and voluntary buyouts at its U.S. plants, indicate efforts to streamline operations. However, its reluctance to close factories may be a sticking point in negotiations. In China, both brands have suffered from stiff competition, with Honda’s sales plummeting 30% and Nissan’s falling 12% last year, further underscoring the challenges ahead.
Complicating matters further, Renault, which holds a 36% stake in Nissan, has expressed reservations about the merger, seeking assurances that its investment will be fairly valued. Nissan’s financial woes deepened after a weak earnings report in November, leading to drastic cost-cutting measures, including 9,000 job cuts and a 20% reduction in production capacity. In response, Honda outlined its takeover plan in December, with the goal of finalizing the framework by the end of January and completing the deal by June. If successful, the newly merged entity could emerge as a formidable competitor in the evolving global auto industry, but only if the involved parties can navigate the complex financial and operational roadblocks ahead.
(Source: Automotive News)
