Honda Nissan To Merge; Focus On Electric & Hybrid Vehicles

Japan’s major auto players, Honda and Nissan recently signed a MOU (memorandum of understanding) to explore a strategic partnership focused on new technologies or intelligence and electrification. Mitsubishi Motors also joined discussions with aim to evaluate its involvement in the integration and make a final decision by January, 2025. This merger will potentially create the world’s third-largest OEMs by sales as the automobile industry is undergoing major shift towards electrification.

Focus on EVs and Hybrid Powertrains

The automakers have agreed to explore and work towards greater synergy in EV components and autonomous driving technology. If the three players merge, this might result into them becoming over $50 billion brand in terms of market capitalisation and the accumulative sales would be over 8 million vehicles. Though Toyota would remain the largest Japanese player as they rolled out 11.5 million vehicles in 2023.

In August, this year Nissan, Honda and Mitsubishi announced to share electric vehicle components including batteries, and research software for autonomous technologies. In March, Nissan and Honda signed an agreement for the same.

A Desperate or Survival Move

Nissan has been bleeding money off late, and they are left with funds that could run the brand for about 12-14 months. Plight for Nissan started with the arrest of Renault-Nissan’s ex-chairman Carlos Ghosn in late 2018 who was found guilty of fraud and misuse of company’s assets. Speaking to media via a video conference, Ghosn called the merger a desperate move by the company.

What is in Here for Honda?

What benefits Honda of this merger is the access to Body-on-frame SUVs from Nissan that the former brand lacks. Nissan is also one of the first carmakers to taste success in electric vehicles. They are also big in Hybrid powertrains that goes well with Honda’s aspirations to make its EVs and next-gen hybrid vehicles. Though the brand is struggling to exist as it had announced to cut 9,000 jobs that contribute to around 6% of its workforce globally.

We also saw some changes at the management level along with the company’s CEO proposing 50% pay-cut to help ease the financial troubles. Due to financial woes, Nissan’s share prices dropped massively. After the merger news broke out, Nissan’s shares grew by 1.6% in a day, and around 20% in a week’s time.

Effect on India

Things in India too are not good for Nissan as they lack product offerings and managing to hardly sell 3000 units a month. Honda too is struggling here and has decided to bring in three new energy vehicles in the next 3 years. What happens in India after the merger, is yet to be seen. Stay tuned to CarLelo for more updates on this.

Also Read: 2 Hyundai e-SUVs To Debut On January 17 - Auto Expo 2025