Just Politics

Honda, Nissan begin merger talks

Honda and Nissan are on Monday, December 23, 2024, likely to unveil a pact to explore a merger by setting up a joint holding company with the aim of reaching a deal by June 2025.

The consolidation would create the world’s third-largest auto group by vehicle sales after Toyota and Volkswagen as legacy carmakers face growing challenges from Tesla and Chinese rivals.

Honda, Japan’s second-biggest automaker after Toyota, has a market capitalisation of more than $40 billion, while third-ranked Nissan is valued at about $10 billion.

The Japanese automakers will hold a joint press conference following board meetings on Monday that Nissan’s alliance partner Mitsubishi Motors is also expected to attend, a person familiar with the matter told Reuters.

The source spoke on condition of anonymity because the information was not public.

Honda and Nissan aim to finalise the deal by June 2025 and set up a holding company in August 2026, when its shares will be listed while Honda and Nissan would delist, said the person.

Honda will appoint the majority of the holding company’s board, including its leader, the source added.

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The integration of the two storied Japanese brands would mark the biggest reshaping in the global auto industry since Fiat Chrysler Automobiles and PSA merged in 2021 to create Stellantis in a $52 billion deal.

Combining Mitsubishi Motors would take the Japanese group’s global sales to more than 8 million cars, surpassing the current No. 3 group, South Korea’s Hyundai and Kia.

Honda and Nissan have been exploring ways to bolster their partnership, including a merger, Reuters reported last week.

The two companies said in March they were considering cooperation on electrification and software development. They agreed to conduct joint research and widened the collaboration to Mitsubishi Motors in August.

Last month, Nissan announced a plan to cut 9,000 jobs and 20% of its global production capacity after its sales plunged in its key China and U.S. markets. Honda also reported worse-than-expected earnings due to declining sales in China.

Like other foreign carmakers, Honda and Nissan have lost ground in the world’s biggest market China amid the rise of BYD and other local brands making electric and hybrid cars loaded with innovative software.

The Star

Segun Ojo

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