Nissan and Honda announce merger plans

Two Japanese automotive giants, Honda and Nissan, are aiming to merge in order to compete more strongly against China.

This merger will add a new competitor to the world's leading automotive manufacturers, such as Toyota, Volkswagen, General Motors, and Ford.

The deal is estimated to be worth billions of dollars. In a press conference announcing the merger, Honda CEO Toshihiro Mibe stated that the primary goal of this step is to counter "increasing Chinese influence."

Mibe expressed that their competitive strategies must be implemented by 2030, otherwise they face the risk of falling behind their rivals.

The merger, which also includes Mitsubishi—of which Nissan is the largest shareholder—will allow the three companies to jointly utilize their resources against other competitors like Tesla.

The rapidly growing electric vehicle market is increasingly coming under the influence of Chinese manufacturers like BYD. BYD has become a strong competitor against some of the world's largest automotive companies.

Mibe said, "With emerging powers, China's influence is increasing and the dynamics of the automotive sector are changing."

Increasing competition in China is challenging many car manufacturers. Lower labor and production costs allow local firms to be more agile, which enables them to sell their products at more affordable prices than their foreign rivals, making them attractive to buyers.

This factor has made China the world's largest electric vehicle producer.

In October, the European Union (EU) announced the imposition of additional tariffs on imports from China to the EU, alleging that China provides unfair subsidies to its electric vehicle manufacturers.

These tariffs are planned to be increased from 10 percent to 45 percent over the next five years, but there are concerns that this could negatively affect demand by increasing electric vehicle prices.

Nissan CEO Makoto Uchida stated that the total sales of Nissan and Honda exceed 191 billion dollars. In March, the two companies decided to form a strategic partnership for electric cars. Honda CEO Mibe said that the talks began because they needed to make the transition against competitors by 2030.

Mibe added that the agreement does not mean a bailout for Nissan. In November, Nissan announced that it would reduce global production and lay off 9 thousand people to cope with falling sales in China and the US.

Nissan is trying to recover following the arrest of former CEO Carlos Ghosn. Ghosn fled Japan in 2019 and is currently wanted by Interpol. Ghosn had described the merger plans as panic and desperation.

Honda and Nissan agreed to cooperate on electric vehicles in March and advanced their partnership on battery technologies in August. However, a potential merger could be subject to political scrutiny in Japan, as Nissan is expected to dissolve its partnership with Renault.

News Source: 12punto