Honda and Nissan are engaged in discussions regarding a potential merger.
Honda and Nissan are engaged in discussions regarding a potential merger.
The entities declared, in a communiqué, that they have been engaged in negotiations, yet they did not disclose any specifics or timeline regarding when a deal, if it materializes, might be concluded. It's also uncertain what form this potential joint-venture might assume. Tuesday's issue of Nikkei first broke the news of this potential alliance.
As discussed in March, Honda and Nissan are examining diverse avenues for potential future collaboration, profiting from each other's strengths, stated the corporations in a Tuesday declaration. Should there be any advancements, they will notify their shareholders at the opportune moment.
In March, Honda and Nissan agreed to collaborate on electric vehicles and in August, announced they would work together on battery technology. There could be merits in strengthening their alliance as both entities have encountered difficulties this year.
Similar to numerous non-Chinese automakers, both companies have faced setbacks in the previously lucrative China market, the globe's premier automobile market. Chinese patrons had favored foreign brands but have predominantly switched to domestic brands, which are perceived as more economical within the country. Chinese authorities have additionally provided incentives to expedite the adoption of electric vehicles and plug-in hybrids by end-consumers.
Although both companies manufacture EVs and plug-ins, Chinese brands such as BYD have surpassed their technology and are offered at reduced costs.
Nissan has experienced hardships since its former CEO, Carlos Ghosn, became a fugitive, escaping Japan to his birthplace, Lebanon. Ghosn was detained in Tokyo in 2018 on allegations of financial misconduct, and Nissan dismissed him. Ghosn has repeatedly denied the accusations.
His dismissal unsettled the powerful automaking alliance among Nissan, Renault and Mitsubishi. Previously the largest automaking alliance globally, Renault subsequently drastically decreased its ownership stake in Nissan, jeopardizing the Japanese automaker.
Nissan reported that their operating income between March and September dropped by 90% compared to the same period the previous year.
Meanwhile, Honda, approximately five times the size of Nissan, also encounters challenges. Honda announced their intention to sell only zero-emission vehicles in significant markets by 2040. However, the transition has proven sluggish, as modest fuel prices, inadequate charging infrastructure and increased competition have diminished demand for EVs in the U.S. and Europe.
Ramishah Maruf, of CNN, provided additional information to this report.
The potential joint-venture between Honda and Nissan, if successful, could bring significant benefits by leveraging each other's strengths in the challenging business environment they currently face.
Recognizing the difficulties in the lucrative Chinese market, both Honda and Nissan are exploring opportunities to collaborate and stay competitive against local brands like BYD.