In a move that may change the landscape of the Japanese automobile industry, Honda Motor and Nissan Motor are preparing to enter into negotiations about a possible merger, according to what was reported by the Japanese newspaper Nikkei and reported by Bloomberg in its report.
The proposed merger – according to Bloomberg – may later expand to include Mitsubishi Motors, with the aim of forming a strong alliance that can confront fierce competition from electric car giants such as Tesla and Chinese car manufacturers.
Agreement details
The two companies plan to sign a memorandum of understanding that includes examining the possibility of establishing a new holding company in which Honda and Nissan will share equal shares of stock, according to Nikkei, without disclosing its sources.
Under this agreement, the new company will operate under a unified entity. This enhances the competitive capabilities of the two companies and allows them to benefit from shared resources to increase their efficiency in the growing electric vehicle sector.
This alliance reflects the attempt of leading Japanese companies to maintain their position in light of the great challenges facing the industry.
Nikkei points out that with Tesla’s increasing dominance in the global electric car market and the advancement of Chinese companies such as BYD, it has placed great pressure on traditional companies to accelerate their shift towards clean technology.
The potential alliance between Honda and Nissan may represent an opportunity to share the high investment costs associated with the development of electric cars and batteries, in addition to innovation in smart systems, according to Bloomberg.
This proposed merger comes at a time when Japanese companies face increasing pressure to catch up with the digital and technological transformation led by American and Chinese companies.
If Mitsubishi Motors later joins this alliance, this will increase the size and market power of the new entity, making it a major competitor in the global electric car market.
Through this potential merger, Japanese companies seek to regain their leadership in the automotive sector and keep pace with the major transformations taking place in the global market. Bloomberg also points out the importance of these moves in light of the ongoing transformations towards green and sustainable vehicles.
Nissan is one of the leading companies in the production of electric cars thanks to its famous Nissan Leaf model, with a total production of about 150,000 electric cars last year, while its total production still exceeds 3 million vehicles annually, according to company reports.
On the other hand, Honda is focusing on strengthening its presence in the hybrid and electric car market with models such as the CR-V Hybrid and Honda E, and this has contributed to its global production reaching 4.1 million vehicles annually.
For its part, Mitsubishi is a major player in the hybrid car market, with the success of the Outlander Bee Hive model, which has achieved strong sales globally, in addition to its annual production of about 1.2 million vehicles.
