The breakdown of negotiations adds to concerns around the future of Japan’s auto industry against growing competition from Chinese rivals in the electric vehicle space, across markets.
Ambitious alliance combusts
In December, Honda Motor Co. and Nissan Motor Corp. confirmed entering discussions to establish a joint holding company. Had the deal proceeded, the combined entity would have been smaller than only Toyota and Volkswagen in global vehicle sales, boasting a market value estimated at $60 billion. The partnership aimed to enhance both automakers’ ability to compete with industry disruptors like Tesla and BYD, particularly in the fast-evolving electric vehicle (EV) sector.
However, sources indicate that negotiations were strained by fundamental disagreements over leadership structure and strategic direction. Nissan, Japan’s third-largest automaker, reportedly resisted taking a subordinate role in the alliance, given Honda’s stronger financial standing and anticipated dominance within the proposed joint executive team.
Read More: Beginning of Nissan-Mitsubishi-Honda merger.
Diverging fortunes and Strategic shifts
The formal announcement of the end of the merger conversation coincided with the release of both companies’ third-quarter financial results for the 2024 Japanese fiscal year. Honda reported a 7% operating margin, a stark contrast to Nissan’s 0.7%. Nissan’s operating profit for the first nine months of the fiscal year plummeted by 87% year-over-year, prompting the company to revise its full-year forecast, citing volume adjustments and rising incentives, partially offset by favourable foreign exchange rates.
Despite the failed merger, Honda and Nissan reaffirmed their commitment to ongoing collaborations in battery technology, software development, and EV advancements alongside Mitsubishi Motors. This cooperation remains crucial as Japanese automakers seek to accelerate electrification efforts in the face of mounting global pressure.
Read More: Why did Mitsubishi step out of the merger talks?
Future prospects and potential new partnerships
With the Honda deal off the table, Nissan is reportedly exploring new partnerships outside of Japan as well. One notable contender is Taiwanese electronics giant Foxconn, best known for manufacturing Apple’s iPhones. Foxconn has expressed interest in collaborating with Nissan, signalling a potential shift toward cross-industry alliances that could reshape the future of automotive manufacturing.
Foxconn, renowned for assembling Apple’s iPhones, has strategically expanded into the electric vehicle (EV) sector. The Taiwanese electronics giant unveiled its open EV platform, MIH, in 2020, aiming to revolutionise EV manufacturing by offering a versatile foundation for various vehicle models, previewed by concepts like the Model C SUV and Model E sedan. In 2022, Foxconn further solidified its automotive ambitions by acquiring a manufacturing facility in Lordstown, Ohio, positioning it as a significant EV production hub in North America. The company has also expressed interest in collaborating with established automakers, including potential partnerships with Nissan, to co-develop and manufacture EVs, highlighting its intent to become a pivotal player in the evolving automotive landscape.
In parallel, Mitsubishi Motors has opted to maintain its independence amidst the shifting alliances within the Japanese automotive industry. Following the cessation of merger talks between Honda and Nissan, Mitsubishi announced its decision to forgo integration with its compatriot manufacturers. Instead, Mitsubishi plans to focus on its strategic initiatives, aiming to strengthen its market position through innovation and targeted investments. This move underscores Mitsubishi’s confidence in its unique market approach and its commitment to navigating the competitive automotive sector on its own terms.
As the global auto landscape continues to evolve, both Honda and Nissan now face the challenge of strengthening their market positions independently while navigating the rapid transition to electrification and software-driven mobility solutions.
Nissan and Mitsubishi have reaffirmed their commitment to the Australian market with plans to introduce several new and updated models in the coming years. Nissan is set to launch the updated X-TRAIL family for the 2025 model year, featuring enhanced technology and convenience across all trims. Additionally, the 2025 Nissan Qashqai will receive a comprehensive facelift, boasting a bold new front end and updated features, with an Australian launch planned before 2025. Mitsubishi, on the other hand, has confirmed that a new-generation ASX will join its lineup in 2025. This model, based on the Renault Captur, will replace the long-standing ASX, offering a modern and efficient option for Australian consumers. These developments underscore both brands’ dedication to providing Australian customers with contemporary and diverse vehicle choices.
Read More: Why did Nissan step out of the merger with Honda?
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