Japan’s third-largest automaker Nissan continues to face significant business challenges as it has struggled to recover from past instability following the 2018 arrest and removal of former chairman Carlos Ghosn.
“Honda is pretty confident and has a lot in their favour, whereas Nissan is in a bad place. They don’t have a dance partner right now,” said Christopher Richter, an automotive analyst at CLSA. “They probably need to think about doing something different.”Also read: Every Mercedes has a bit of India: Santosh Iyer explains how Bengaluru powers brand’s global tech
According to media reports, the merger was complicated by Honda’s proposal for Nissan to become a subsidiary.
In line with its restructuring plan announced in November, Nissan is reducing its global production capacity by 20% and cutting 9,000 jobs. The company has already ceased production at its Changzhou plant in China and may further scale down operations in its joint venture with Dongfeng Motor.According to a Reuters report, Nissan is open to new collaborations, with Taiwan’s Foxconn emerging as a potential partner. Foxconn Chairman Young Liu stated that while the company would consider acquiring a stake in Nissan, its primary focus would be cooperation.
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Japanese automakers are facing mounting competition from Chinese electric vehicle manufacturers like BYD and potential tariffs in the United States. Meanwhile, Honda reported a 7% decline in profit for the nine months ending in December, with its automotive division experiencing slower sales in China and Japan.
However, its motorcycle segment remained strong, and overall revenue for the period increased by nearly 9% to 16.3 trillion yen ($106 billion), although net profit fell to 805 billion yen ($5 billion) from 869.6 billion yen the previous year.
Following initial reports of the merger talks in December, Nissan’s stock rose by more than 60%, while Honda’s increased by approximately 26%. These gains have since moderated to 21% for Nissan and 11% for Honda.
Nissan’s market capitalisation remains significantly lower than Honda’s, standing at nearly one-fifth of Honda’s valuation of approximately 7.5 trillion yen ($48.6 billion). A decade ago, both companies had comparable market values of about 4.6 trillion yen.
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