Honda and Nissan are planning to merge as the two Japanese companies seek to fight off competition from the Chinese auto industry.
This integration would create one of the world’s largest auto producers alongside Toyota, Volkswagen, General Motors and Ford.
Honda CEO Toshihiro Mebe said the potentially multi-billion-dollar deal to combat “the rise of Chinese power” was the main driver behind the plan.
Mebe said a plan to “fight back” must be put in place by 2030, otherwise they risk being “defeated” by rivals.
Becoming one of the auto industry’s biggest brands would allow companies to reclaim space in the growing electric vehicle market, which is increasingly dominated by Chinese-made electric vehicles, including BYD, which have posed a threat to some global companies. The most famous car companies.
“There is a rise of Chinese power and emerging powers, and the structure of the auto industry is changing,” Mebe told reporters at a press conference announcing the merger talks.
Increased competition in China has left many automakers struggling to compete, as lower labor and manufacturing costs make local companies more nimble and able to price their goods lower than their foreign counterparts, making them more attractive to buyers.
This has led to China becoming the largest producer of electric vehicles in the world.
European Union officials said in October The Chinese state was unfairly supporting electric car makers and announced the imposition of heavy taxes on electric car imports from China to the European Union, after the majority of member states supported these plans. The tariffs are set to rise from 10% to 45% over the next five years, but there are concerns that they could raise the prices of electric cars for buyers.
Nissan CEO Makoto Uchida said that total sales of Nissan and Honda exceed $191 billion (£152 billion).
In March, the two Japanese automakers agreed to explore a strategic partnership for electric vehicles.
“The talks started because we believe we must build the capabilities to fight them, including existing emerging powers, by 2030. Otherwise, we will be defeated,” Mr. Mebe said.
He added that the deal is not a rescue for Nissan, which is suffering from declining sales.
In november, Nissan said It will cut about 9,000 jobs as it cuts global production to address falling sales in China and the United States. The cuts mean its global production will fall by a fifth.
Nissan, once a symbol of Japan’s auto power, has spent the past few years trying to regain its footing after the arrest of longtime CEO Carlos Ghosn. Mr. Ghosn faced accusations of financial misconduct when he fled Japan in 2019, and is currently the subject of an Interpol Red Notice, a request to law enforcement authorities around the world to find and arrest a person. Ghosn, who is currently in Lebanon, told reporters last December that Nissan’s merger plans were an act of panic and desperation.
Any merger would depend on Nissan’s transformation, Meby said.
The merger, which would include Mitsubishi – of which Nissan is the largest shareholder – would allow the three companies to share resources against other electric car competitors such as Tesla. Honda and Nissan agreed in March to cooperate in their electric vehicle businesses, and in August they deepened their ties, agreeing to work together on batteries and other technologies.
However, any deal would likely be subject to intense political scrutiny in Japan because it could lead to job cuts, while Nissan would likely dismantle its alliance with French carmaker Renault.
