Honda and Nissan Consider Merger – A Strategic Move in the Race Against BYD

The announced possible acquisition of Nissan by Honda could give the two Japanese automakers the necessary boost to keep up with the market leader BYD in China. According to recently released sales figures, Honda sold 3.43 million vehicles worldwide in the first eleven months of 2024, while Nissan sold just over 3 million units. In contrast, BYD sold an impressive 3.76 million vehicles in the same period—a clear signal that Honda and Nissan are individually weaker, whereas together they could have a chance to succeed in this dynamic market. Both brands are struggling against emerging domestic manufacturers in China, which overtook Japan last year as the world's largest car exporter and will further expand its lead by 2025. Honda and Nissan have already had to lay off staff and reduce production in China, while Mitsubishi Motors has virtually exited the market. Another aspect is Honda's massive share buyback of 1.1 trillion yen, as reported in an analysis by S&P Global. According to the rating agency, however, such large-scale share buybacks do not strengthen the future business base but lead to capital outflows. Nevertheless, Honda's stock rose by 0.8% on Wednesday following the announcement. Not only in China, but also internationally, Honda and Nissan are facing declining sales figures, with production at both brands having partially plummeted. However, in the event of a merger, the two could potentially compete not only with BYD but also with industry giants like Toyota.