Honda and Nissan agreed to talk on Tuesday, reported by Nikkei newspaper; both of them are struggling to compete in the EV (electric vehicle) sector, including Tesla and Chinese automaker BYD.
More or less Chinese automakers have stirred up automotive globally, and when a big company wants to go all electric, it takes a vast amount of reach and development.
Also, this move could be a move to head off crippling Trump tariffs. In the US, Honda has 12 plants, while Nissan has three facilities across the country. The merger would increase US manufacturing footprints and reduce their exposure to import taxes.
We think that both companies will create something beneficial to the auto market because Honda has compelling products. Financially, Honda and Nissan are the second and third car manufacturers in Japan, with Toyota in first place. The respective market values of Honda and Nissan are 5.95 trillion yen ($38.8 billion) and 1.17 trillion yen ($7.6 billion).
If successfully merged, it would make them one of the largest automakers in the world, right behind Toyota and VW. And possibly to bring Mitsubishi under the umbrella.
What are we expecting as consumers? Typically, the merged product creates a lower cost for the sub-brand. Especially, EV, and it’s growing rapidly in recent years, but EV cars are still expensive and lack charging infrastructure.
Report prepared by KCD