Honda and Nissan are looking for a merger or other financial understanding, it was reported yesterday Nikkei. The most famous Japanese media have stated that this is the way through which the talks started at the end of Marchwhen both companies announced that they would be ineffective for future work.
last summerHonda and Nissan have confirmed that they will enter the formula they work together in the development of new products related to electric mobility in both software and batteries. Now, The discussion about the merger is now clear.
When everything from Bloomberg They advise Honda to consider other types of associations. For example, he thinks of becoming a major part of Nissan or, on the contrary, as part of the same company in which Mitsubishi could enter, a company in which, in turn, Nissan is a major shareholder with 20% of the shares. .
When it was confirmed that both companies had talks on the first day last March, Makoto Uchida (CEO Nissan) stated that the basic understanding was that since “the companies do not respond” (to the changes in the markets caused by Tesla and Chinese electric cars) ) will be extinguished” in words reported by The guard.
Earthquakes in Japanese industry
Although Honda has stated that it needs to completely renew itself in order to continuously change the market, Nissan is the party most interested in a merger or in being absorbed, in part, by Honda.
The year 2024 is proof that Nissan is on a tightrope. Between March and September of this year, which corresponds to the first semester of the Japanese fiscal year, the company is It reduced its operating profit by 90% 70% of their profits. These perspectives; The New York Times He said that this exercise showed a profit of 975 million dollars, for 3.6 billion dollars achieved in 2023.
Therefore, Nissan published a month ago planned to lay off 9,000 workers to adapt to the new economic situation. This implies a decrease in its current production, which the new CEO promised to increase during the year, but in the end they had to reduce due to the low demand for the product.
Nissan is in a very serious situation: 9,000 workers will stop and the manager is sure that they will survive “between 12 and 14 months”.
Faced with this desperate situation, “we have 12 or 14 months to survive,” a senior official also reported Financial Times. From there, the company studied various possible partnerships, among which Foxconn was also discussed. They say they accelerated the deal in partnership with Honda to prevent the Taiwanese company Nissan from taking over their shares at a low price. Bloomberg.
Although the merger of Honda and Nissan (the second and third largest automobile companies in Japan) brought together what was to come. the creation of the largest automobile conglomerate since the rise of StellarFrom eleifend, he wanted not to say. The country’s directors have always preferred to invest in local companies over other Italian companies. Organizations like those maintained by Toyota, Mazda, Subaru and Suzuki, for example, are common.
To these we must add that Alliance between Renault and Mitsubishi not finished until the expected results. Since Franco’s entry into the Nissan company, the company has been on a tough path to cut costs and expenses under the leadership of Carlos Ghosn. But relations are only getting worse The manager fled Japan from the flight of private individuals, to clear accusations of embezzlement within society.
Over time, Renault and Nissan parted ways despite the fact that the French own 43.4% of the Japanese shares. In July 2023 It was decided to keep both teams barely 15% invested.
The balance of the last 25 years in which Nissan went from near bankruptcy to will be part of the largest industrial group about the car in the world and then returning to a very complicated situation, he is negotiating with Honda to be able to rescue his rival until now. something about which Charles Ghosn himself warned last summer.
Recall to survive
In the discussions in which the possible merger was discussed, the challenge facing Tesla and the Chinese electric cars was always put on the table. Both parts seem to have completely changed what we now understand by “car” and the great artists seem to be trying to adapt in a hurry to a completely changed world.
With China, the largest automobile market, jumping to the electric car and Europe using aggressive policies that lead to this in a relatively short time (ban on combustion engines except very neutral in 2035 and one strong reduction in polluting emissions in 2003″) the electric car is positioned as a fundamental pillar in the automobile market.
Japanese companies may not have a specific statute in their policy (Toyota promises it won’t be a major option) but yes one of the greatest. therefore Nissan and Honda cannot completely disappear from the Chinese market (Regarding local companies) nor Europedespite the fact that its sales have already been reduced on the continent.
Chinese manufacturers, good technology development or by the influence of the stateThey managed to build a production chain that significantly reduced the times of each generation of vehicles. All this with cost savings allows them to place their cars at a much lower price than their competitors.
This directly clashes with the Japanese way of working, which traditionally opts for slower changes in trajectory and polishing to exhaustion and perfection the products they already have on the market. They do, with an electric car the innovator’s dilemma.
Manufacturers have a challenge: continuously betting on the technology that gives them the most returns (hybrids) without falling behind in the sale of electric cars.
For in Financial Times They questioned whether Nissan’s philosophy with Honda is understood when it comes to collaborating with engineers from both sides. Nissan has worked with the company’s western philosophy for the fourth century. Honda, for its part, is slower and is committed to offering its employees a less structured but more polished work environment by moving around more frequently.
This approach worked well for Honda, which grew significantly at a time when Nissan was under the control of Renault Vel. For before it is a matter of society Renault is Nissan’s lifeline. Launched together with Renault Nissan Leaf. The car arrived at a moment in time when it could lay the foundations for what the electric car would look like and give them the main key. However, they didn’t bother to put it up for a brand like Toyota did with the Prio, they point out Bloomberg.
When the train was slipping away from Nissan, Honda based its growth on combustion engines, which was gradually selected until achieving great results with its hybrids, both in Japan and, especially, in North America. In fact, Honda claims He expects to double the number of hybrids sold between now and 2030 in that market.
Despite this, they know that they cannot give up one of the great revolutions that Tesla has brought: software. The Japanese have serious problems adapting to the market, where software is key, comparing weight with traditional automobile values. For this reason, Japan promoted an alliance between Toyota, Honda and Nissan to develop new software that will allow them to compete with China and Tesla.
But not only that, Honda has already arrived with Sony to enter into these programs, with the aim of modernizing their vehicles to bring them closer to an audience that is increasingly evaluating What can your car do with its fenders?to turn from the use of a navigator into a carious wheel; something common in China.
In all these circumstances, it is necessary for large manufacturers to reduce costs and seek companies that allow them to launch their products in a shorter period of time or to renew them more quickly. China is immersed in it, with companies capable of releasing new products in record time, and Tesla has chosen to launch the vehicle. very long term design but what, by doing on its own account, results significantly reduce your production costs. cars in addition They are updated every so often with updates constantly expand their functions.
As a result, we see how the market is gradually consolidating into huge groups of so many brands sharing platforms, development and research. Honda and Nissan may be the last, but not the only ones. For example, Volkswagen invested in Riviano to identify itself; leaving a list of 6,000 million notwithstanding one of the greatest crises of labor in history. recently too invested in XPeng Gain Chinese knowledge and improve your products in the local market.
Also, years ago, Volkswagen and Ford agreed to become an American company use electric platforms one of the first models to be launched in Europe and reduce costs. Luca de Meo, CEO of Renault proposed between the collision of the airbus car with the aim of sending European manufacturers to carry out new electrical projects. A stellar result is the merger of FCA and PSAone of the largest automobile conglomerates in the industry.
The market is completely changing. There is less and less space for small manufacturers, while values with the car and associated companies are trying to find market solutions, which is aimed at electric cars in two large markets and hinders their transformation.
Photo | Sling
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