Honda and Nissan, the two big Japanese giants are in terms of merger. Most probably they are going to include Mitsubishi Motors in their Merger, the main motive of their merger is to create a new company that will be a tough competitor in the electric vehicle market and to strengthen their position in the automobile industry. Till now no confirmation has been made by any of the motor companies but some familiar faces are saying that Honda and Nissan are in merger talks which would create a strong rival to Toyota Motors.
Different Speculations about the Honda and Nissan Merger
Shinji Aoyama, the executive vice president of Honda said on Wednesday that to strengthen their position in the market and to address financial challenges Honda is looking into several options including the establishment of a holding company, capital tie-up, or a Merger. Following the news, the stock of Honda fell to 3.4% and the stock prices of Nishan rose to 24% on Wednesday. The confirmation is made by some of the inside people of the company who refused to get identified because till now the discussion is private and the news is still not confirmed by the two automobile giants. Other people said that after the merger both companies are looking to create a new holding company, under which they would run their combined business. Mitsubishi Motors Corp, which has capital ties with Nissan is in talking terms with them, there are chances of Mitsubishi Motors getting in the merger, one of the people said. However, the person also says that these are the early discussions going on between the companies, and no agreement has been made till now.
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Nissan and Honda under pressure
Both Nissan and Honda are facing immense pressure in the electric vehicle market because the Tesla and Chinese automobile companies are continuously increasing their production and their sales rates are also rapidly increasing. The sales of Nishan and Honda are continuously decreasing which is creating problems for the automobile companies. If the merger between Nishan and Honda happens it will be one of the largest mergers in the automobile industry. In January 2021, one of the biggest mergers that happened between Fiat Chrysler and PSA Groupe was for $52 billion and Stellantis was formed. The deal between Honda Nissan and Mitsubishi will consolidate the Japanese automobile industry into two parts. The first one will be the new company that will be created after their merger and the second one will be the Toyota group of companies. After the merger, the companies will be given more resources to compete with other automobile giants from all around the world. However, with France’s Renault SA, Nissan has loosened its ties, on the other hand, Honda is also backing away from General Motors.
Sales of Honda and Nissan
The total sales of Nissan in the year 2023 was 3.4 million, on the other hand, Honda sold 4 million vehicles all over the world in 2023. 2023 was one of the best years for Toyota as it was the highest-selling automobile company which sold 11.2 million vehicles worldwide, their sales rate increased to 7.2% from last year. Only 800,000 Mitsubishi vehicles were sold in 2023. Toshihiro Mibe, the chief executive officer of Honda made the possibility of tying up with Nishan. The first move after the merger will be that the two companies will work on electric vehicle batteries and software. Tatsuo Yoshida, the Bloomberg Intelligence senior auto analyst said that if this merger happens it will give relief to Nishan as they are faced with financial struggles. Both companies are signing a memorandum after their mutual understanding in which they will discuss their percentage of equity stakes in the new company, said the reports. This merger will give a kick to companies fighting with their rivals such as Chinese automakers and Tesla in the automobile market. In late New York trading Nishan roses by 12% and Honda roses by 0.9%.
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Number of Sold Vehicles by Honda and Nissan
In the first six months of the year, Honda, Nissan, and Mitsubishi together sold 4 million vehicles while Toyota individually sold 5.2 million vehicles. This merger may be helpful for these companies to defeat Toyota which is right now one of the largest automobile companies. Toyota has its stocks in Subaru crop, Mazda Motor Corp, and Suzuki Motor Corp making the company a powerhouse. On Tuesday Honda’s Valuation came to ¥6.8 trillion, close to trading in Tokyo however, the market capitalization of Nissan was above ¥1.3 trillion. The combined value of both companies was taken away by Toyota’s value which is ¥ 42.2 trillion. Honda has suffered a lot to compete with other electronic vehicle companies and has spent billions of dollars in its production but their recent partnership with GM was not that good. GM has now stretched its ties with Hyundai Motors which is a South Korean company. Nissan has faced pressure from the shareholders of the company.
Conclusion
The news about the merger of Honda and Nissan is not officially confirmed yet. After watching the condition of both the automobile companies and the ongoing speculation in the automobile market it is pretty confirmed that some discussions are going on between Honda and Nissan. Toyota is right now leading the automaker market and has sold 5.2 million vehicles globally this year. After the Merger the companies can challenge Toyota which is ruling the automobile world with its electric vehicles. Some news is coming that Honda and Nishan are also taking Mitsubishi in their combined Merger.
