Nissan and Honda Discussing Potential Merger Between Companies
Nissan and Honda have been in discussions to deepen the relationship between the two—and potentially even merge together, reports Reuters.
In March, the two automakers already partnered together to collaborate on electric vehicle development. Since then, pressure has been mounting on Nissan, releasing a $2.6 billion cost savings plan last month that will cut 9,000 jobs and 20% of its global production capacity.
“This deal appears to be more about bailing out Nissan, but Honda itself is not resting on its laurels,” said Sanshiro Fukao, executive fellow at Itochu Research Institute. “Honda's cash flow is set to deteriorate next year and its EVs haven't been going so well.”
Both Honda and Nissan have faced increasing rivalry from EV makers like Tesla and BYD, pushing them to cut costs and accelerate the pace of vehicle development; something a merger would help with.
Together, Nissan and Honda would comprise a $54 billion company, with the capacity to produce 7.4 million vehicles annually. It would be the third-largest auto group in the world, led by Toyota and Volkswagen.
The two automakers have been in talks of how their companies could collaborate, possibly establishing a holding company, and even potentially teaming up with Mitsubishi.
Analysis from S&P Global Ratings shared that in the event of a merger, it would take time for changes to take effect—which would likely only happen if one company is to take a dominant role in the merger. Honda and Nissan also have different company cultures, as pointed out by Tang Jin, a senior researcher at Mizuho Bank.
“Honda has a unique, technology-centric culture with strengths in powertrains, so there should be some internal resistance to the merger with Nissan, a competitor with a different culture that is now faltering,” said Jin.
