The Honda-Nissan merger has been one of the most talked about Japanese automaker partnerships in the automotive world, as it would likely create the world's third-biggest automaker. This coming together of the best Japanese car brands with distinct backgrounds is a sure bet to form a strong force amid on-going global electrification changes. The Japanese car manufacturers are said to seal the deal by mid-2025 and that a holding company will go public by August 2026. The impact of the Honda-Nissan merger deal has caused a stir in the business, with investors and industry insiders eager to watch how this daring move plays out.
Both Leaders Are Mapping Out the Possibilities of a Joint Holding Company
Both Honda’s Toshihiro Mibe and Nissan’s Makoto Uchida have begun talks to merge the two companies into a joint holding company. This company would likely be grouped among internationally reputed auto giants, such as General Motors and Volkswagen, which are forging bonds to share the cost of creating next-generation automobiles.
In contrast to the gasoline-powered automobiles that still have a firm grip across many countries, the electrification shift is gradually taking place with more cars now being fitted with electric motors, batteries, and advanced software that makes features like autonomous driving possible.
Challenges and How Both Leaders Plan to Improve
Honda’s Mibe has stated that the company and Nissan have determined that they can work together more effectively to manage research and development and new investments to manage the transition.
This merger will help both leaders to better compete in the rapidly changing automotive world.
Working Towards Better Competency
Both Honda and Nissan leaders had managed to maintain a solid market share in China, which they once considered a crucial market. But now they are aware that the market share has been going downhill due to the rise of Chinese automakers like BYD and Nio. These automakers are known for not only producing automobiles at a lower cost, but also gaining favor with Chinese buyers for their advanced software and electric cars.
Sharing Efforts in Production Facilities
The two leaders are planning to share their efforts, starting with production facilities, hoping to save expenses and boost productivity. They are looking to streamline production through shared assembly lines. This makes it beneficial for Honda, which can advance faster, banking on Nissan's expertise in SUVs, hybrid powertrains, and EVs. By diversifying their product lines to include plug-in hybrid electric vehicles (PHEV), electric cars (EV), hybrid electric vehicles (HEV), and internal combustion engines (ICE), both leaders believe that this could better meet the expectations of a wide range of worldwide consumer demands.
Combining R&D Work
Secondly, the leaders are looking to combine their companies’ research and development efforts to slash costs by removing overlaps and combining resources. For instance, it was alleged that Honda spent $6.2 billion on R&D in 2023, while Nissan and Renault spent $2.3 billion after the merger. Therefore, the leaders believe that the combined annual R&D spending would produce accelerated innovation and more effective development.
Likely to Gain a Negotiating Leverage to Buy Raw Materials
Thirdly, the leaders see a possible leverage in negotiating when it comes to buying components and raw materials like steel, aluminum, semiconductors, and lithium-ion batteries from this merger.
Connecting Supply Chains
Fourthly, the leaders plan to connect their supply chains hoping to increase the effectiveness of their logistics. The merger could bring down the costs to a great extent by reeling in distribution networks, cooperative warehousing, and improved inventory control.
What the Merger Means for Other Companies
If the merger turns out to be successful, the joint company will have the power to decide which models and businesses. Once that happens, there is a possibility that there would be an influx of new models in the future, particularly for electric cars. Yet this could be a long road to traverse, especially in the case of any modifications required, regarding the model selection, production, or dealers.
For the Indian Market
As for India, it depends on settling the uncertainties surrounding Honda's delayed domestic presence and Nissan's collaboration with Renault. There are still many questions left unanswered around the Oragadam plant's future, Renault's place in the combined company, and its capacity to compete with more established firms.
The Indian auto sector will likely take an observer’s seat to see how Nissan and Honda work through these uncertainties, which will determine whether the merger will result in the anticipated synergies or add more operational complexity.
Various Leaders from the Industry Are Skeptical
Industry experts, leaders, and analysts have expressed mixed views and are skeptical of the merger despite the publicity. Even Honda’s Mibe was found to have had a not-so-smooth talk when explaining the partnership's strategic advantages. The leader allegedly expressed difficulty when responding to why Nissan would make a good business partner for Honda.
This had the critics debate whether this merger could be a gamble or a wise strategic move by both leaders, even though the merger might result in a global automotive behemoth that produces 7.4 million vehicles yearly. They have voiced that the merger between Nissan and Honda is a combination of two different companies. They admitted Honda's robust hybrid offering and customer base are helping it to sail stable. But at the same time, they also saw that the company faced a bittersweet experience in making a big difference in the electric vehicle (EV) industry, especially after its alliance with General Motors broke down.
For Nissan, the critics voiced that the company appears to be in a bit of a sticky situation, considering incidents such as its dilly-dally dealer network, stagnated EV lineup and its declining financial health. For instance, they mentioned how the Ariya hasn't taken off, while the Leaf, which was once a ground-breaking EV, now seems outdated.
Analysts have painted Honda could play as Nissan's defender against a hostile acquisition attempt by Foxconn. In Honda’s defense, its leader implied that the merger is not a rescue attempt. Largely, experts have interpreted it as an effort to shield Japan's car sector from international influence and save Nissan from becoming even more unstable.
They believe that the merger will not immediately act as a remedy to existing problems, if it goes through. This also includes any significant results which might take at least three to five years, they denote. But one aspect they have expressed optimism is in the competency growth, which they believe could grow in the meantime due to rivals like Toyota, Volkswagen, and up-and-coming Chinese automakers.