- Honda, Nissan and Mitsubishi merge: a powerful trio to mark the beginning of a new era for the Japanese car industry
- Tesla CEO Musk hailed the success of electric cars, BYD's growing exports to Europe, what do others say?
- The stock market reacted positively to the merger, with all companies' share prices rising
- The agreement would result in gross profits of €19 billion. But the plan poses many challenges
Honda, Nissan and Mitsubishi merge: a powerful trio to mark the beginning of a new era for the Japanese car industry
23 December 2024 Honda Motor Co., Ltd. and Nissan Motor Co., Ltd. have announced plans to merge by 2026 in one of the largest automotive agreements in history. The move is not only a reinforcement of Japan's position in the global market but also a response to the rapidly growing competition from Chinese and US electric car manufacturers.
The planned merger promises to create the world's third-largest car manufacturer in sales, behind only Toyota and Volkswagen. If Mitsubishi Motors joins the alliance, total sales could exceed 8 million vehicles annually. This would allow it to compete with the current third-place holder, the Hyundai Motor Group, which has annual sales of around 8.8 million cars.
"The rise of Chinese car manufacturers and new players such as Tesla has dramatically changed the automotive industry. If we can't compete by 2030, we will simply lose out," said Toshihiro Mibe, CEO of Honda, at a press conference in Tokyo.
Mibe also stressed that the merger is not a rescue plan for Nissan. "Nissan announced 9 000 job cuts and a 20% reduction in production this year, but the CEO stressed that the merger would be a "partnership between equal partners" and not a unilateral decision.
Meanwhile, Mitsubishi Motors, whose main shareholder is Nissan, is still considering its involvement.
"We will decide by the end of January," said Mitsubishi Motors CEO Takao Kato. He stressed that the merger was being considered to help the company continue to grow and contribute to global electrification initiatives.
Tesla CEO Musk hailed the success of electric cars, BYD's growing exports to Europe, what do others say?
The news of the merger has provoked mixed reactions. Tesla CEO Elon Musk wrote on social media: "Japanese manufacturers are uniting against global challenges, but this is just more evidence of how the EV (electric car) industry is displacing traditional players."
Meanwhile, Chinese carmaker BYD has announced plans to increase exports to Europe. "BYD hopes to gain more market share in a region where traditional manufacturers face challenges with EV infrastructure and production costs. BYD's main objective is to take advantage of market developments and displace its competitors from their position.
Yasutoshi Nishimura, Japan's Minister of Economy, Trade and Industry, called the merger "a historic event demonstrating the Japanese industry's readiness to respond to global change". He added that the government is ready to support initiatives that enhance the country's technological progress and innovation.
At the same time, Renault, Nissan's largest shareholder, has expressed interest in the merger plans.
"We are ready to talk and consider all possible options that could benefit our partners and the market," said Renault CEO Luca de Meo.
The stock market reacted positively to the merger, with all companies' share prices rising
The news positively impacted the stock markets, with Honda up 3.8%, Nissan up 1.6% and Mitsubishi Motors up 5.3%. Investors see the potential of the merger to reduce production costs, pool technological resources, and strengthen the companies' market position.
Honda will sell 4.1 million cars in 2023, Nissan 3.4 million, and Mitsubishi Motors 907,000. Together, these manufacturers are almost on par with the Hyundai Motor Group.
Although sales are stable, the financial indicators show differences. Honda has a net profit of 7.9 billion dollars in 2023, mainly due to motorcycle sales and the success of hybrid models. Meanwhile, Nissan's profits fell to 2.2 billion dollars, and sales in China fell by 15%. Mitsubishi Motors posted a profit of $400 million, mainly due to rising sales in South-East Asia.
The agreement would result in gross profits of €19 billion. But the plan poses many challenges
The merger is expected to result in annual revenues of over 30 trillion yen (about 191 billion USD) and an operating profit of over 3 trillion yen (about 19 billion USD). The companies expect to reduce production costs by 20% by 2030 by linking supply chains, sharing technology solutions, and developing new electric vehicle platforms.
"This is not just an economic project - it is also a cultural challenge," emphasized Toshihiro Mibe, CEO of Honda, referring to the differences between the companies' structures and the need to align them.
