In a bid to better compete with automobile major Toyota in Japan, Honda Motor and Nissan Motor are currently exploring a preliminary merger or capital tie-up deal to create a singular rival to the former.
As per reports, Honda is also considering the option to expand the scope of its ties with Mitsubishi Motors to create a new holding company altogether.
These preliminary discussions between Honda and Nissan to come together in a unified manner to consolidate the Japanese auto industry into two camps- Toyota Group and a potential new entity out of Honda-Nissan, come in the aftermath of Nissan loosening its ties with Renault and Honda backing away from its deal with General Motors.
Currently, the market capital of Toyota Group stands at $276 billion while Nissan- Honda-Mitsubishi is around $57 billion.
Not only this, Honda, Nissan and Mitsubishi combined sold about 4 million vehicles globally in the first six months of the year as against Toyota which individually sold about 5.2 million vehicles.
Hence the deal which is believed to be disclosed on December 23, this year, is likely to provide the automobile majors entering the deal with more resources to compete with larger peers globally.
However, looking at the history of Honda and Nissan’s dealings in the past and the fact that these discussions are only preliminary as of now, there are apprehensions around the deal culminating successfully.
That being said, the two Japanese carmakers plan to sign a memorandum of understanding to discuss shared equity stakes in a new holding company as indicated earlier during a joint news conference between Nissan and Honda to work together on electric vehicle batteries and software to compete against rivals like Tesla in the electric vehicles space.
