Honda and Nissan team up to challenge China in the automotive market

Honda and Nissan plan to merge as the two Japanese automakers aim to counter growing competition from the Chinese car industry

Honda and Nissan are considering a merger that could position them among the world’s largest automakers, alongside Toyota, Volkswagen, General Motors, and Ford. The proposed multibillion-dollar deal is driven by the need to counter the “rise of Chinese power” in the automotive industry, Honda’s CEO Toshihiro Mibe stated.

Mr. Mibe emphasized that a comprehensive plan to “fight back” must be in place by 2030, warning that failure to act could leave them vulnerable to their rivals. The merger would also include Mitsubishi, where Nissan is the largest shareholder, allowing the three companies to pool resources and better compete with electric vehicle (EV) leaders such as Tesla.

Chinese-made EVs, including those from BYD, are increasingly dominating the global market, posing significant challenges to established automakers. With lower labor and production costs, Chinese firms have become highly competitive, offering attractively priced vehicles. As a result, China has emerged as the world’s largest producer of EVs.

In response, EU officials announced steep tariffs on Chinese EV imports, set to rise from 10% to 45% over the next five years, aiming to counter alleged state subsidies. However, these measures have sparked concerns about higher EV prices for consumers.

Nissan’s CEO, Makoto Uchida, noted that combined annual sales of the two companies exceed $191 billion. Discussions about a strategic partnership began in March, with both firms agreeing to cooperate on EV development. By August, the partnership expanded to include joint efforts on batteries and other technologies.

Mr. Mibe stressed that the merger is not a bailout for Nissan, which has faced declining sales. In November, Nissan announced plans to cut 9,000 jobs and reduce global production by 20% to address weak performance in China and the U.S. These challenges come as Nissan continues to recover from the fallout of former CEO Carlos Ghosn’s arrest and subsequent escape from Japan in 2019.

Mr. Ghosn, now residing in Lebanon under an Interpol Red Notice, criticized the merger talks as a sign of “panic and desperation.” Meanwhile, Mr. Mibe made it clear that any deal hinges on Nissan’s financial recovery and may lead to significant political and labor scrutiny in Japan, as well as the potential unwinding of Nissan’s alliance with Renault.

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  • Growing up with a father who was a mechanic I had an appreciation for cars and motorcycles from an early age. I shared my first bike with my brother that had little more than a 40cc engine but it opened up a world of excitement for me, I was hooked. As I grew older I progressed onto bigger bikes and...

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