Makoto Uchida (L), president and CEO of Japanese auto maker Nissan, shakes arms with Toshihiro Mibe (R), director, president and consultant govt officer of auto maker Honda, following a press convention in Tokyo on August 1, 2024.
Richard A. Brooks | Afp | Getty Photos
Nissan Motor shares surged Wednesday following a media report that the struggling Japanese automaker is seeking to merge with Honda Motor, forming an even bigger entity that may compete with bigger rivals and make investments extra within the rising marketplace for electrical automobiles.
Nissan shares had been final buying and selling up 23.7%, whereas Honda shares slipped 3%.
Honda and Nissan are contemplating working beneath a holding firm, and shortly will signal a memorandum of understanding, in accordance with a report within the Nikkei newspaper. Additionally they look to ultimately convey Mitsubishi Motors, through which Nissan is the highest shareholder with a 24% stake, beneath the holding firm, in accordance with the report.
The merger, if profitable, will likely be particularly helpful to Nissan, which had beforehand introduced plans to slash 9,000 jobs and lower international manufacturing capability by a fifth amid fierce competitors in its main markets.
Joe McCabe, the president and CEO of AutoForecast Options, advised CNBC Wednesday that Nissan wants a “revitalization” after its relationship with Renault went sideways.
“They [Nissan] actually did not have a management place in any one of many segments they competed in,” he stated.
In an announcement, Nissan stated media reviews that it’s “contemplating a enterprise integration” with Honda are usually not based mostly on an announcement from the corporate. Nissan stated it’s contemplating varied prospects for future collaboration with Honda and Mitsubishi Motors, however no choices have been made. Shares of Mitsubishi Motors had been final up 19%.
The mixed Nissan-Honda-Mitsubishi enterprise would equate to greater than 8 million car gross sales yearly, in accordance with Nikkei. That might place the corporate among the many world’s largest automakers, however nonetheless beneath fellow Japanese automaker Toyota Motor, at 11.2 million in 2023, in addition to German automaker Volkswagen, which final yr reported gross sales of 9.2 million automobiles.
The merger report follows the 2 Japanese automakers getting into right into a strategic partnership earlier this yr on shared automotive parts and software program.
Such a tie-up can be the most important automotive trade merger since Fiat Chrysler joined with France-based PSA Groupe to type Stellantis in January 2021.
The worldwide auto trade faces a number of challenges together with the transition to EVs, a class dominated by the likes of Tesla and China’s BYD. Volkswagen, for example, plans to shut factories and lower 1000’s of jobs in Germany, whereas Basic Motors lately pulled the plug on Cruise, its self-driving robotaxi firm.
For Honda and Nissan, there’s additionally the specter of tariffs proposed by President-elect Donald Trump that will require a large reorganization of worldwide provide chains.
– Michael Wayland and Kevin Lim contributed to this report.
