Honda and Nissan on Thursday announced the scrapping of merger talks that would have created the world’s third-biggest auto company by unit sales behind Toyota and Volkswagen.
Here are some key points about why the Japanese companies explored a tie-up, the reasons for their failure, and where this leaves them in a difficult global auto industry.
– What is their history? –
Honda was founded in 1948 as a small factory making motorcycles and is now the world’s biggest producer of the two-wheelers. It also makes 3.7 million four-wheel vehicles annually.
More than 40 percent of these were sold in North America last year, roughly 20 percent in China, 18 percent in Japan and three percent in Europe.
Nissan, founded in 1933, produced 3.1 million cars last year. North America accounts for 38 percent of its global sales, China 20 percent, Japan 14 percent and Europe 10 percent.
French automaker Renault took a 36.8 percent stake in the then loss-making firm in 1999 and Mitsubishi Motors joined the alliance 17 years later, with Nissan taking a 34-percent stake in its struggling Japanese rival.
But tensions emerged, stoked by the French state increasing its stake in Renault in 2015, followed by the 2018 arrest of Nissan boss Carlos Ghosn in Japan on suspicion of financial misconduct and his subsequent flight from the country.
In 2023, Renault sold part of its stake in Nissan as part of an alliance overhaul that saw them retain 15 percent cross-holdings.
– Why did they try to merge? –
Nissan has been struggling, last year reporting a 93-percent plunge in first-half net profit and axeing 9,000 jobs in November. It is also saddled with billions of dollars of debt.
For both companies, achieving economies of scale would have served to “enhance R&D capabilities, and better compete” in the areas of “advanced technologies including electrification and software-defined vehicles”, said Tatsuo Yoshida, senior auto analyst at Bloomberg Intelligence.
Japanese carmakers have long lagged in the electric vehicle sector, especially against Chinese firms, with the country’s leading EV-maker BYD last year selling more vehicles globally than Honda and Nissan.
The pair had already agreed on talks over partnership in electrification technologies and software development, and were later joined by Mitsubishi Motors.
– Why did merger talks fail? –
When the merger talks were announced in December the plan was that the two automakers along with Mitsubishi Motors would integrate their businesses under a new holding company.
