Major Merger in the Automotive Industry: Honda and Nissan on the Verge of Merger

The Japanese automotive market is facing a massive upheaval. Industry giants Honda and Nissan have initiated formal talks about a potential merger that could create the world's third-largest car group. Although the outcome of these negotiations remains uncertain and partly depends on the turnaround of the troubled Nissan, both companies aim to complete the merger by August 2026. Potential benefits include synergies of over one trillion yen, to be achieved through a shared platform, joint research and development efforts, and joint procurement. Operating profit could be increased by 54% – a promise that, however, is expected to fully materialize only after 2030. A significant challenge remains from competitors both from China and the electric vehicle market. While Nissan was once a pioneer in the EV sector with the Leaf, production issues with new models like the Ariya have slowed progress. Honda is focusing more on hybrid models but has achieved greater market success in the US. Analysts warn that both companies must make significant efforts in developing convincing EV models to stay competitive. In the emerging Chinese market, both manufacturers are under pressure from innovative domestic brands like BYD. At the same time, challenges loom in other markets: both in China and the US, the companies are experiencing declining sales and must cut back on production capacity. In the long term, the merger could help the companies better prepare for potential trade policy changes in the US, especially under new political leadership. The push for the merger also highlights the threat looming from China, as Chinese manufacturers increasingly break into markets previously dominated by Japanese automakers. Such a significant merger would be the largest change in the global automotive industry since the merger of Fiat Chrysler and PSA in 2021, which led to the creation of Stellantis. In a rapidly changing industry, this could indicate increased consolidation, as analysts suggest.