- Honda and Nissan revealed they had signed a memorandum of understanding
- They said a tie-up would potentially help them ‘maintain global competitiveness’
Honda and Nissan are weighing a merger amid an intense battle to capture the booming electric vehicle market, potentially building the world’s largest carmaker by sales.
The Japanese car giants revealed they had signed a memorandum of understanding (MOU) on a potential business integration, along with smaller Nissan alliance member Mitsubishi Motors.
They said a tie-up would potentially help them ‘maintain global competitiveness’ and deliver ‘more attractive’ products and services as the vehicle industry experiences a massive upheaval.
Honda and Nissan agreed to consider collaborating on developing EV technology in March, before deciding at the beginning of August to conduct joint research on autonomous driving and share components for EVs like batteries.
A merger between the longtime competitors – who are also Japan’s second and third-largest carmakers – and Mitsubishi would create a business worth over $50billion in market capitalisation.
Standing together: Nissan and Honda revealed they had signed an MOU on a potential business integration, along with smaller Nissan alliance member Mitsubishi Motors
The firms say the deal would offer the standardisation of vehicle platforms, which would lower costs and create stronger products, the optimisation of factories, and the integration of research and development functions.
Makoto Uchida, chief executive of Nissan, said: ‘I believe that by uniting the strengths of both companies, we can deliver unparalleled value to customers worldwide who appreciate our respective brands.
‘Together, we can create a unique way for them to enjoy cars that neither company could achieve alone.’
Traditional carmakers are struggling to compete with upstart electric vehicle makers, particularly those from China, which dominate the rapidly expanding EV market.
Chinese EV firms have benefited from generous government subsidies, tax breaks, and China’s access to critical raw materials such as graphite and refined rare earth metals.
Shenzhen-headquartered BYD overtook Elon Musk’s Tesla to become the world’s biggest-selling EV manufacturer last year after selling more than 3 million cars.
Nissan’s Leaf vehicle was the world’s most popular electric vehicle during the early 2010s, but its popularity has dwindled amidst heightened competition, contributing to Nissan’s severe financial difficulties.
Last month, the group announced it would axe 9,000 jobs and cut global production capacity by a fifth as it posted a £47.2million third-quarter loss.
Soon afterwards, Fitch Ratings lowered Nissan’s credit outlook to ‘negative,’ citing the firm’s falling profits and weaker-than-expected performance in North America.
Honda also revealed last month that its first-half profits slumped by around 20 per cent to $3.2billion due to falling sales volumes in China.
Toshihiro Mibe, president of Honda, said: ‘Bringing together the resources including knowledge, talents, and technologies that Honda and Nissan have been developing over the long years is essential to overcome challenging environmental shifts.’
The Sunday Times reported that Honda could make vehicles at Nissan’s prominent Sunderland plant as part of a tie-up, having stopped all car production in the UK three years ago.
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