Honda Motor Co., Ltd. (TSE:7267) and Nissan Motor Co., Ltd. (TSE:7201) are expected to announce as early as December 23, 2024 the start of their talks on a possible merger, people familiar with the matter said. The two Japanese automakers aim to share the cost of developing electric vehicle and autonomous driving technologies to catch up with U.S. and Chinese rivals. Mitsubishi Motors Corporation (TSE:7211) another Japanese automaker of which Nissan is the largest shareholder, is expected to join the merger talks after the turn of the year.
A combination of Honda, Nissan and Mitsubishi will create the world's third-largest auto group with global annual vehicle sales of about eight million units. But Honda and Nissan have a lot of overlap with each other. Both focus on North America and Asia as key markets and target the same customer base as mass-market automakers.
There was less overlap in the partnership between Nissan and Renault SA of France, said Jusuke Ikegami, a professor at Waseda University's graduate school and expert on the auto industry's business strategy. "Nissan's main sales areas and areas of expertise were different from those of Renault, but the situation is significantly different regarding its cooperation with Honda," Ikegami said. Honda and Nissan may need to consolidate overlapping areas if they try to maximize synergies from a possible merger.
The merger talks may be affected if Nissan, already struggling with weak sales in North America and China, plunges into a deeper slump. A wild card for the talks is Taiwan's Hon Hai Precision Industry Co., which is reportedly interested in acquiring some Nissan shares held by Renault. If Hon Hai becomes a shareholder of Nissan, the merger talks will be complicated.