Foremost Japanese car manufacturers Nissan and Honda have held explorative talks about the merger of both companies to create a $52 billion business.
The merger is to help both companies compete better as Chinese Electronic Vehicle manufacturers are taking over the market due to growing consumer demand for electric vehicles.
Both companies had earlier announced in March they could team up to develop Electric Vehicles, this is now being seriously considered following a dip in the shares of both companies in recent times.
Nissan Troubles
Nissan has in recent times witnessed a significant drop in sales especially in North America and China where sales figures have slumped 24%. The slump is as a result of competition from local Chinese carmakers who offer electric vehicles loaded with high-tech features that appeal to Chinese consumers.
In the US, Nissan does not have any hybrid models at a time gas-electric models are in vogue. This means Nissan has faced problems moving even its 2023 models. To compound Nissan’s woes, other car manufacturers like Toyota, Honda, and Hyundai have an advantage in areas like fuel efficiency, electric vehicle development, and global market penetration.
As a result, the car maker has had to cut production, cut costs, and lay off employees. In addition to this, the company has been actively exploring strategic partnerships and a long-term investor to help stabilize its future following the decision by Renault to reduce its stake and scale back its investment in Nissan.
Honda to The Rescue
Honda which is almost five times the size of Nissan is now seeking to team up with Nissan to fight growing competition. Honda currently faces challenges of its own as its plans to sell only zero-emission vehicles in major markets by 2040 is going slower than planned due to relatively low gas prices, insufficient charging infrastructure and increased competition which has slowed the demand for EVs in the United States and Europe.
If the merger goes ahead as planned, the merged companies would rank as the third biggest car manufacturer in the world behind Toyota and Volkswagen.
