Japanese companies become active to deal with China, Honda, Nissan and Mitsubishi will merge!
New Delhi: Japan’s two big auto companies Nissan Motor and Honda Motor are preparing for a merger. The tough challenge from China, especially in the EV segment, has forced Japan’s second and third largest auto companies to merge. According to a Reuters report, both the companies are in talks to form a holding company. Mitsubishi Motors can also be included in this. Instead of competing with each other, these companies want to merge among themselves. This will reduce their costs and increase margins. The market cap of these companies at Tuesday’s closing price is $50 billion.
Nissan will benefit the most from this merger. Last month, the company announced a cut of 9,000 jobs and a 20% reduction in manufacturing capacity. Despite this, the company’s operating margin is expected to be 0.4%. However, Honda is in a slightly better position. Its operating margin is expected to be 4.6%. In March, both these companies agreed to explore the possibility of a strategic partnership for EVs. After the boom in the production of EV cars in China, people are abandoning petrol and diesel cars and turning to electric cars.
Fear of China
Both companies say that talks about the merger between them are still in the initial stages and there is no guarantee of reaching a deal. However, experts say that the merger between Honda and Nissan will not be easy. The reason for this is that a large number of people may lose their jobs. Also, Mitsubishi can also be included in this partnership. Nissan is the largest shareholder of this company. After this news, Nissan’s shares have jumped by 20% and Mitsubishi’s by 13%. Honda’s shares have fallen by 2%.
China’s share in global EV sales was about 70% in November. Honda and Nissan are coming together due to China’s rise. Last year, global sales of both the companies were 74 lakh units but they are struggling due to cheap EVs coming from China. Chinese company BYD overtook Tesla in terms of sales for the first time in October.
Meanwhile, Nissan has issued a statement in this regard. The company said that there are reports in the media that Honda, Nissan and MMC are considering a business integration. This is not based on any announcement from our company. It was announced in March and August this year that Nissan, Honda and MMC are considering various possibilities of future cooperation. But no decision has been taken yet. If there will be any update, we will inform all the concerned parties in due time.
