Japanese car makers Honda and Nissan hold merger talks

Honda and Nissan are understood to have held exploratory talks a couple of potential merger to assist them compete in opposition to electrical automobile (EV) makers, significantly in China.

The discussions are within the early levels and there’s no assure {that a} deal will probably be agreed, BBC Information understands.

In March, the 2 Japanese automotive makers agreed to discover a strategic partnership for EVs.

The corporations responded to the BBC with similar statements, which mentioned: “As introduced in March of this 12 months, Honda and Nissan are exploring varied prospects for future collaboration, leveraging one another’s strengths.”

Honda and Nissan haven’t denied the story, which was first reported by Japanese enterprise newspaper the Nikkei, however mentioned it was “not one thing that has been introduced by both firm”.

“If there are any updates, we are going to inform our stakeholders on the acceptable time,” they added.

The 2 corporations are anticipated to formally affirm that they’ve held the talks as early as subsequent week, in response to Japanese TV channel TBS.

Nissan declined to touch upon a Bloomberg report that it had been approached by Foxconn in regards to the iPhone maker taking a controlling stake within the automotive agency. Foxconn didn’t instantly reply to a BBC request for remark.

A possible merger between Japan’s quantity two and quantity three automotive producers may very well be sophisticated for a number of causes.

Any deal is prone to come underneath intense political scrutiny in Japan as it might result in main job cuts. Nissan can be prone to be confronted with unwinding its alliance with French automobile producer Renault.

Honda and Nissan agreed in March to cooperate of their EV companies, and in August deepened their ties, agreeing to work collectively on batteries and different know-how.

In August, the 2 corporations additionally introduced an settlement with Mitsubishi Motors to debate intelligence and electrification.

The Nikkei additionally reported that Nissan and Honda might finally deliver Mitsubishi into any potential partnership. Nissan is Mitsubishi’s largest shareholder.

Nissan shares rose greater than 23% in Tokyo on Wednesday. Honda shares fell about 3%, whereas Mitsubishi’s jumped by virtually 20%.

The talks come as many automotive manufacturers grapple with rising competitors because the trade shifts from petrol and diesel automobiles to electrical, with manufacturing in China booming.

“The thought that a few of these smaller gamers can survive and thrive is getting more difficult, particularly while you add on the complexity of all the extra Chinese language producers who’ve are available and are competing fairly strongly,” mentioned Edmunds analyst Jessica Caldwell.

“It is simply type of essential to survive, not solely to outlive, but additionally simply to afford the longer term.”

Honda and Nissan have been shedding market share in China, which accounted for nearly 70% of worldwide EV gross sales in November.

The 2 manufacturers had mixed international gross sales of seven.4 million automobiles in 2023, however are struggling to compete with cheaper EV makers akin to BYD, which has seen its quarterly revenues soar, beating Tesla’s for the primary time in October.

Jesper Koll, from Japanese on-line buying and selling platform operator Monex Group, questioned whether or not a merger may make the businesses extra aggressive.

“Is that this actually simply rearranging the deck chairs on the Titanic within the sense that neither Honda nor Nissan actually have any merchandise or any applied sciences that international customers need?”

“From that perspective, it is a good rescue nevertheless it’s not creating a brand new nationwide champion.”

Further reporting by Peter Hoskins.