Honda and Nissan are in discussions to merge in an effort to strengthen their position against the growing influence of Chinese electric vehicle (EV) manufacturers. The potential multibillion-dollar deal would create one of the world’s largest car manufacturers, rivaling industry giants like Toyota, Volkswagen, General Motors, and Ford.
The primary motivation behind the merger is to counter “the rise of Chinese power” in the global automotive market, according to Honda CEO Toshihiro Mibe. Speaking at a press conference, Mibe emphasized the urgency of a strategic plan to “fight back” against the competitive threat posed by Chinese EV makers, warning that without a clear path by 2030, Japan’s car manufacturers risk being “beaten.”
The merger would also include Mitsubishi, of which Nissan is the largest shareholder, enabling the three companies to share resources and strengthen their position against competitors like Tesla. The growing market share of Chinese-made electric vehicles, particularly those from companies such as BYD, has made it increasingly difficult for traditional automakers to compete.
Mibe stated, “The structure of the automobile industry is changing. There is a rise of Chinese power and emerging forces,” underscoring the significant shift in the global market. Chinese manufacturers have an edge in production due to lower labor and manufacturing costs, allowing them to offer vehicles at more competitive prices. As a result, China has emerged as the world’s largest producer of electric vehicles.
The growing competition from China has prompted action in other markets as well. In October, European Union officials imposed new tariffs on Chinese EV imports, citing unfair state subsidies. The taxes, set to rise from 10% to 45% over the next five years, aim to protect European manufacturers, though concerns remain that these tariffs could drive up prices for consumers.
Nissan and Honda, with a combined annual sales total of over $191 billion, began their strategic partnership in March to collaborate on electric vehicle development. Mibe explained that the merger discussions are part of an effort to build the “capabilities to fight emerging forces,” including Chinese manufacturers.
Nissan, which has been struggling with declining sales in key markets such as China and the U.S., recently announced plans to cut 9,000 jobs and reduce global production by 20%. The company’s challenges were compounded by the arrest of former CEO Carlos Ghosn in 2019 on charges of financial misconduct. Ghosn, currently residing in Lebanon, has criticized the merger as a desperate move.
While the merger is seen as a way to strengthen both companies, it is likely to face intense political scrutiny in Japan, particularly with concerns over job cuts. Additionally, Nissan is expected to reassess its long-standing alliance with French automaker Renault.
