Image source: Du Ge
On December 18th, some media reported that Nissan Motor Co. and Honda Motor Co. planned to negotiate on the merger to better compete in the rapidly changing global automobile industry. It is reported that Honda and Nissan are considering setting up a holding company to operate, and plan to include Mitsubishi Motors under the holding company. At present, Nissan holds 24% of the shares of Mitsubishi Motors and is its largest shareholder.
Subsequently, it was reported that Hon Hai Precision, Foxconn’s parent company, had approached Nissan about the shareholding. In view of the precedent of Foxconn’s acquisition of Sharp in 2016, its shareholding intention may stimulate Honda and Nissan’s anxiety about the acquisition, thus accelerating the merger process of the two.
However, both Honda and Nissan responded in official website that, as announced in March and August this year, Honda, Nissan and Mitsubishi have combined their respective advantages and are considering various possibilities for future cooperation, but no decision has been made.
If the merger takes place, Nissan, Honda and Mitsubishi will become the third largest automobile manufacturer in the world after the merger, second only to Toyota and Volkswagen. The merger will also be the biggest deal in the automotive industry since the formation of Stellantis by FCA Group and PSA Group in January 2021.
one
The situation is not optimistic.●
At the end of last month, some media reported that Nissan was facing a bankruptcy crisis and its cash flow could only last for 12-14 months.
In the first half of fiscal year 2025 (April-September 2024), Nissan’s operating income was 5.98 trillion yen, down 1.3% year-on-year; Operating profit was 32.908 billion yen, down 90.2% year-on-year; The net profit was 19.223 billion yen, down 93.5% year-on-year; The operating profit margin was only 0.5%, compared with 5.6% in the same period last year.
China is an important single market for Nissan, which is facing the decline of sales. According to the data of Nissan China, from January to November, 2024, the cumulative sales volume of Nissan China, including passenger cars and light commercial vehicles, was 621,700 units. In the same period of last year, it was 694,900 units, a year-on-year decrease of 10.53%.
On November 7th, Nissan Motor Co. announced that it would cut its annual profit forecast, and it would lay off 9,000 people worldwide and cut its global production capacity by 20%. In addition to lowering the annual profit forecast and layoffs, Nissan Motor Co., Ltd. is taking measures including reducing sales, comprehensive and administrative expenses, reducing costs and optimizing asset mix, hoping to reverse its performance. At the same time, President and CEO Makoto Uchida of Nissan Motor Co., Ltd. will voluntarily give up 50% of his monthly salary from November this year, and other members of the Executive Committee will also voluntarily reduce their salary accordingly.
At the same time, Nissan Motor Co., Ltd. also announced that it will reduce its shareholding in Mitsubishi Motors from 34% to 24%.
In addition, in June this year, Nissan closed its passenger car factory in Changzhou, Jiangsu. Dongfeng Nissan officially responded that this decision is based on the company’s overall development strategy and changes in the market environment, aiming to better adapt to the development needs of enterprises in the direction of new energy by optimizing and adjusting internal production capacity and resource allocation. While ensuring the production capacity of current models, Dongfeng Nissan is stepping up efforts to lay out production lines of new energy models and increase investment in related fields to meet future market demand.
Honda’s life is relatively better.In the first half of fiscal year 2025 (April-September, 2024), Honda’s consolidated operating income was 10.79 trillion yen, a year-on-year increase of 12.4%; Operating profit was 742.6 billion yen, an increase of 6.6%; Pre-tax profit decreased by 15.6% year-on-year to 741.9 billion yen. Its global car sales decreased by 8.0% year-on-year to 1.779 million units.
According to the data of Honda China official website, from January to November 2024, the cumulative sales volume of Honda’s terminal cars in China was 740,400, compared with 1,068,400 in the same period of last year, a decrease of 30.7%.
In July, 2024, Honda China announced the optimization of production capacity, and confirmed that two of the seven vehicle production lines in China will be closed this year. After adjustment, Honda’s total vehicle production capacity in China will be reduced from 1.49 million to 1.2 million.
2
Cooperation to reduce costs●
Facing the impact of new energy vehicles in China, Nissan and Honda have strengthened cooperation this year.On March 15th, Nissan and Honda announced the signing of a memorandum of understanding to cooperate in electric vehicle business, such as joint procurement, joint development of power platforms, and generalization of spare parts. The two sides hope to reduce costs and enhance their competitiveness in electric vehicle products through resource integration.At that time, Toshihiro Mibe, CEO of Honda, proposed the possibility of capital cooperation with Nissan.
In August, Honda, Nissan and Mitsubishi jointly signed a memorandum of understanding on deepening the strategic partnership framework, cooperating in the basic technology field of the next generation software-defined vehicle (SDV) platform, and accelerating the realization of carbon neutrality.
It is worth mentioning that in March this year, Nissan Motor Co., Ltd. released the "The Arc Nissan Arc Plan", focusing on all-round new product planning, promoting electric drive, innovative R&D and production methods, applying digital new technologies and deepening strategic partnerships to increase global sales and improve profitability. At the same time,Nissan also plans to launch 30 new models in the next three years, including 16 electric vehicles and 14 internal combustion engines, to meet the diversified customer needs of different markets in the process of electrification transformation.
In May, Honda also said that it would start a new plan and promised to double its investment in electrification and software to about $65 billion in fiscal year 2030. Honda also plans to reduce the manufacturing cost of electric vehicles by more than 30% and the procurement cost of batteries in North America by 20%. Min Hong, CEO of Honda, said,The company’s goal is to launch a total of seven new electric vehicles worldwide by 2030, and realize that the sales of electric vehicles and fuel cell vehicles will account for 40% of the global sales.
Under the transformation of Honda and Nissan, if they are combined, they will also have synergistic effects in resources and products.
In the history of automobile development, cooperation between automobile enterprises has also occurred frequently. In May 1999, Renault acquired 36.8% equity of Nissan Motor Co., Ltd. for US$ 5.4 billion, and became the major shareholder of Nissan Motor Co., Ltd. Since then, Nissan has also held 15% equity of Renault, forming a cross-shareholding alliance. In 2016, Nissan Motor Co., Ltd. acquired a 34% stake in Mitsubishi Motors, and since then, the Renault-Nissan-Mitsubishi Alliance has been formed, and its cumulative sales volume once ranked first in the world.
In 2023, Renault and Nissan reached an alliance restructuring framework agreement, and Renault Group transferred 28.4% of Nissan’s shares to a French trust, and Nissan and Renault Group will maintain 15% cross-shareholding. Both parties will have equal voting rights, and both parties can freely exercise the voting rights attached to the 15% direct shareholding.
Toyota also frequently cooperates with other car companies. In August 2017, Toyota and Mazda formed a capital alliance through cross-shareholding; In August 2019, Toyota Motor and Suzuki Motor reached a cooperation through cross-shareholding; In addition, Toyota also holds shares in Subaru, Daihatsu and other car companies.
In 2021, the merger of Citroen Group (PSA) and Fiat Chrysler Automobile Company (FCA) was officially completed. The two parties merged at 50: 50 to form a brand-new group Stellantis, which became the fourth largest automobile group in the world after the merger.
Since the beginning of this year, with the intensification of competition, domestic car companies are also merging their brands to strengthen resource coordination. Under the Taizhou Declaration, Geely promoted the integration of Krypton and Linke, and the geometric brand was merged into the Galaxy brand. SAIC Passenger Car announced the integration of Roewe and Feifan Automobile; In October this year, APP announced that it would migrate to Great Wall Motor APP. From the second half of this year, Euler began to share sales and after-sales channels with other brands of Great Wall.
Obviously, strategic cooperation and resource focus have become the choices of many car companies.
It is worth noting that in China, the market share of Japanese cars has dropped significantly. According to the data of the Federation, in the first 11 months of this year, the cumulative sales volume of Japanese cars was 2,782,500, a year-on-year decrease of 15.6%, and the market share was also reduced from 22.6% in 2021 to 13.7%. This is not optimistic for Nissan and Honda. If we can improve the market competitiveness through merger, we may be able to save the downward trend. But whether they will cooperate through merger or not will take time to wait for the result.
Author Wei Weihe
Source: CarVisibility.
