In an effort to become stronger in the market they are planning to merge wheither they get proposed to do so by some third party or not.

A new rival for Toyota

It was recently reported in the Nikkei that Honda and Nissan have come knocking on each other’s door in what is basically a bid to engage in merger talks. It is said that the two companies are already planning to partner at what could be seen as a holding company to meld together the companies but still remain separate business entities. It maybe recalled that tete-a-tete negotiations are set to begin soon as both parties have already convened to draw up a memorandum of understanding. The goal thus being to establish a pool that can afford greater competition with other large international brands especially in the face of mighty European and American automobile conglomerates.

Thus the strong trio with Mitsubishi in the equation

On a case of the proposed Honda NIssan amalgamation, it will cover more than the two players only. Recognizing that by itself, Mitsubishi Motors does not have sufficient capital, the Nikkei report indicates that the merged group could also comprise Mitsubishi Motors. Mitsubishi’s primary shareholder with 24% of the company’s stocks, Nissan could therefore, assimilate the Japanese manufacture into the holding company format. This would enable the future group to sell over 800000 vehicles per year, a production capacity that will place it among the world largest automakers. It would still be below Toyota and Volkswagen, the two current market leaders even at their own home market.

Cautious statements from Honda and Nissan

Nevertheless, both Honda and Nissan have issued only relatively conservative statements about the technological advantages provided by cars featuring its auto shift system.
Again, Honda and Nissan responded passively to the rumors of the merger. When asked by the Nikkei last month, both firms did not explicitly admit or deny the press report, but stated that the firms ‘are currently evaluating strategic possibilities’ – full details were not given at this time. Honda stated that it was open for any big news that would be communicated to its stakeholders in the usual manner. This is common among firms mainly so that they can keep a certain degree of anonymity when in the early stages of this kind of strategic dialogue.

An environment of merger in the international car manufacturing sector

This merger could be one of the biggest in the automotive manufacturing Industry possibly overshadowing the merger between Fiat Chrysler and PSA Groupe that produced Stellantis in 2021. The plan is likely to be launched at a time when many advisory are compelling traditional manufacturers to form alliances in facing the China threat and the market leader in electric cars, Tesla. Systems change, ramp up of production cost, shift to electrification and technological change force more partnership in automotive industry hence more merger and acquisitions.