Honda and Nissan are contemplating a groundbreaking merger as both companies navigate the profound global transition to electric vehicles (EVs).
According to the Japanese newspaper Nikkei, the two leading Japanese automakers are in the preliminary stages of discussions to potentially combine their operations. This merger could include cost-reduction measures and has raised concerns regarding its impact on employment in the UK, where Nissan employs 7,000 workers.
If finalized, the merger would value the unified entity at £41 billion, positioning it ahead of fellow Japanese giant Toyota and competitors such as Ford and Stellantis, the parent company of Vauxhall.
Despite this, the combined Honda-Nissan entity would still be significantly smaller than industry leaders Tesla, valued at nearly $1.5 trillion, and Chinese EV manufacturer BYD, worth approximately £82.8 billion.
The talks come as both companies struggle to keep pace with Tesla and Chinese rivals, who have established a substantial lead in the EV market. The global shift to electric vehicles has intensified the competition, leaving Honda and Nissan scrambling to maintain their market positions.
Last month, Nissan highlighted the severity of its situation by downgrading its annual operating profit forecast from 500 billion yen (£2.5 billion) to just 150 billion yen.
In response, Nissan announced plans to reduce production and eliminate 9,000 jobs worldwide. In the UK, Nissan has reportedly informed government officials that the automotive sector is at a “crisis point,” urging them to relax EV quota regulations that impose fines on manufacturers exceeding limits on petrol car sales.
Nissan’s Sunderland plant in Tyne and Wear, the largest in the UK, supports 30,000 jobs within its supply chain. Together, Nissan and Honda, Japan’s second and third-largest carmakers after Toyota, achieved global sales of 7.4 million vehicles last year.
However, they are facing significant challenges in the Chinese market, where companies like BYD have surged ahead. In November alone, China accounted for nearly 70% of global EV sales, with over 1.27 million units sold.
The proposed merger between Honda and Nissan represents a strategic move to bolster their competitiveness in the rapidly evolving automotive industry, particularly as the demand for electric vehicles continues to rise globally.
