[SMM Analysis] Honda and Nissan Officially Announce Merger Talks: Is the World's Third-Largest Automotive Group About to Emerge?

On December 23, 2024, Japanese automakers Honda Motor Co. and Nissan Motor Co. jointly announced that they had signed a memorandum of understanding regarding a merger and would officially commence merger negotiations. The two companies plan to merge by jointly establishing a holding company, with both becoming subsidiaries of this holding company. It has been disclosed that the two automakers plan to make a final decision by the end of January 2025, while Nissan's strategic partner Mitsubishi Motors is also considering joining the merger plan, with a decision expected at the same time in 2025. If the two companies merge, they may surpass Hyundai-Kia and Stellantis Group to become the world's third-largest automotive group, trailing only Toyota and Volkswagen.

Against the backdrop of increasingly fierce competition in the automotive industry, Honda and Nissan have long been exploring collaboration. On March 15, 2024, Honda and Nissan announced the signing of a memorandum of understanding for cooperation in the EV sector. On August 1, 2024, Honda, Nissan, and Mitsubishi signed a strategic cooperation memorandum, announcing discussions on a framework for collaboration in intelligent and electrified vehicles. In October 2024, Toyota, Honda, and Nissan reached an agreement to strengthen cooperation in automotive software development, jointly advancing the unification of API standards. By December 23, 2024, Honda and Nissan officially announced the commencement of merger talks.

The significant reason behind Honda and Nissan's series of moves is the sharp decline in their performance. Data shows that from January to November 2024, Honda's cumulative end-user sales in China reached 740,339 units, down 30.7% YoY; Nissan's cumulative sales in China, including passenger cars and light commercial vehicles, totaled 621,713 units, down 10.53% YoY. From April to September 2024, Nissan's operating profit was 32.91 billion yen, down 90.2% YoY, with net profit decreasing by 93.5%. Honda's operating profit for the second fiscal quarter of 2024 was 257.9 billion yen, down 15% YoY. Collaboration may help reduce costs, create synergies, and alleviate the pressure of fierce market competition.

However, there are widespread doubts about whether the merger will bring positive synergies. Former Nissan CEO Carlos Ghosn harshly criticized the merger between Honda and Nissan, stating, "This is a desperate move, not a pragmatic deal, as it is difficult to find synergies between the two companies. They have little complementarity, operate in the same markets, offer nearly identical products, and have very similar brands." Unlike traditional fuel vehicles, the development of NEVs is far outpacing the former, and merely expanding scale and integrating resources may not be sufficient to achieve a leading position. The Stellantis Group, formed by the merger of PSA Group and FCA Group in 2021, serves as an example. In H1 2024, Stellantis Group's net revenue was 85.017 billion euros, down 14% YoY, with net profit halved.

For Honda and Nissan, this merger is fraught with risks and opportunities. Whether they can find a suitable development path amid intense market competition will become a key focus for the future of the global automotive industry.