Key Takeaways
- Nishan Honda and Mitsubishi have merged to become the third largest automobile manufacturer in the world with the plan to dominate the electric vehicle sector by 2030
- Nissan brings EV and smart car expertise, Honda offers reliable engineering and hybrid innovations, and Mitsubishi excels in hybrid SUVs and Southeast Asia. The merger aims to save costs, counter China EV makers like BYD and Nio, and address Nissan’s financial struggles post-Renault split.
- Honda will lead the Merger, managing decisions and appointments Possibility of boosting EV competitiveness in India, where Nissan and Honda have had difficulty expanding.
Honda Nissan and Mitsubishi Merger a Historic Move
The recent merger of Honda, Nissan, and Mitsubishi marks a historic milestone in the global automobile industry. After this merger, the combined entity will be the 3rd largest automobile company in the world. The partnership aims to combine resources to focus on EV (electric vehicles) space, autonomous driving, global expansion, cutting costs, and boosting innovation.
Together they are planning to launch 30 new EV models by the year 2030 and achieve technological and financial growth. Nissan and Honda signed an MOU on December 23, 2024, to investigate business integration through the creation of a joint holding company. Nissan owns a 24% share in Mitsubishi Motors, which has also committed to taking part in these talks and plans to make a decision by the end of January 2025.
What all three companies are bringing to the table for each other
- Nissan: A well-known brand in the international auto business, Nissan Motor Corporation has long been praised for its creative approach to car production. The all-electric Leaf, a ground-breaking car that helped launch the EV market, is a prime example of Nissan’s heritage of creative design and cutting-edge technology. Nissan has led the way in incorporating connected car technologies and autonomous driving capabilities into mainstream automobiles, demonstrating its strong commitment to intelligent mobility. It is a key partner in the automobile industry because of its global reach and electrification expertise.
- Honda: Honda is known for its dependability and aggressive EV approach, making it a pioneer in innovation. Honda has a history of setting industry standards for engineering quality, which is exemplified by its recognizable VTEC engines and cutting-edge hybrid technology. Its steadfast dedication to sustainability and cutting-edge mobility solutions confirms its position as a major force in the EV revolution.
- Mitsubishi: In Southeast Asia, a market with substantial growth potential, Mitsubishi is well-known for its proficiency in producing tough, dependable automobiles. Mitsubishi is well-known for being a pioneer in plug-in hybrid technology and for carving out a market for environmentally friendly SUVs. It is well-positioned to contribute significantly to this partnership due to its strong manufacturing capabilities and in-depth knowledge of emerging markets.
Reason of merger
- Economy of scale
After the merger of Honda and Nissan, the combined entity would become the 3rd largest automaker company globally, after Toyota and Volkswagen. In Japan, after the merger, the combined entity will be a strong competitor to challenge Toyota’s dominance. Together, they would be better equipped to compete in markets worldwide.
- The China Impact
Japan’s manufacturers lost their market-leading position due to the popularity of electric and hybrid vehicles produced by BYD Co. and other Chinese firms, including Xpeng, Nio, and Li Auto. Analysts predict that both Honda and Nissan will announce significant capacity reductions to at least partially offset their fixed-cost exposure in China, where they have been losing market share for some time.
- Cost Sharing
By sharing vehicle platforms and working together on new hybrid and electric vehicles, the two firms hope to reduce costs while keeping both names. In order to work together on software and electric car development, Honda and Nissan also want to combine their research and development departments.
- Nissan Finance Issues
Nissan is struggling and needs to become more competitive, particularly following its split from Renault of France. Last month, following a quarterly loss of 9.3 billion yen (more than $60 million), the company announced that it was cutting 9,000 jobs, or around 6% of its global workforce, and reducing global manufacturing capacity by 20%.
The Biggest Player in the Deal?
Honda is in charge of this transaction and will select the joint holding company’s president in addition to most of its internal and foreign directors. It might also be possible to add Mitsubishi Motors to the deal. The largest shareholder in Mitsubishi Motors is Nissan.
Impact On Indian Markets and Consumers?
Both businesses have shown some success in India, but they have had difficulty expanding. Honda has maintained its dominant position in the mid-level sedan market with the excellent City, but it has not made any headway in other areas of the Indian auto industry. With the City Hybrid, the business led the way in economical hybrid technology in India, but it has since relinquished its position as the Maruti Suzuki-Toyota combine’s leader.
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