What for Honda and Nissan?

The Nissan Motor Corporation and Honda are seen at a joint press conference on his merger talks in Tokyo, Japan. , Photo Credit: Reuters

Honda and Nissan announced scraping of merger dialogue on Thursday, which would have formed the world’s third largest auto company by selling units behind Toyota and Volkswagen.

Here are some important points as to why Japanese companies discovered the causes of tie-up, their failure, and where it leaves them in a difficult global auto industry.

What is their history?

Honda was founded in 1948 as a small motorcycle manufacturer and is now the world’s largest producer of two-wheelers. It also produces 3.7 million four-wheelers annually.

More than 40 percent of these were sold in North America last year, about 20% in China, 18% in Japan and three percent in Europe.

Nissan, established in 1933, produced 3.1 million cars last year. North America is its global sales, China 20%, Japan 14% and Europe 38% of 10%.

French Automeker Renault took 36.8% stake in the then loss -making firm in 1999 and Mitsubishi Motors joined the alliance after 17 years, Nissan took 34% stake in his struggling Japanese rival.

But tension emerged, the French state increased its stake in the Renault in 2015, followed by the arrest of Nissan Boss Carlos Ghosan in Japan in 2018 and the arrest of Nissan Boss Carlos Ghosan in Japan on suspicion of his later flight from the country.

In 2023, Renault sold part of his stake in Nissan as part of an alliance overhaul, which retained him 15% cross-holding.

Why did he try to merge?

Nissan is struggling, reporting a 93 percent decline in the first half net profit and 9,000 jobs in November last year. It is also saddened by billions of dollars debt.

For both companies, to achieve scale economies of scale, “electrification and services will be served” in the fields of advanced technologies, including “electrification and software-defined vehicles,” to increase and compete better “, senior autos of Bloomberg Intelligence Analyst Tatsuo Yosida said.

Japanese car manufacturers, especially the electric vehicle, lagged behind in the electric vehicle sector against Chinese firms, the country’s leading EV-Mekar Beed has sold more vehicles globally than Honda and Nissan last year.

The pair had already agreed to negotiate partnership in electrification technologies and software development, and later joined Mitsubishi Motors.

Why did the merger talks fail?

When the merger talks were announced in December, the plan was that two vehicle manufacturers with Mitsubishi Motors would integrate their businesses under a new holding company.

But local media reports stated that Honda wanted to make it a subsidiary, disappointed with his opponent’s slow decision on restructuring, which Nissan’s leadership found unacceptable.

“Nissan seems to emphasize his freedom and freedom (on decision making),” which cannot maximize the benefit of the scale economy for Honda’s eyes, “said Yoshitaka Ishima, analyst of Mizuho Securities, .

what happens next?

Analysts say that in the long term, both firms will need to find alternative partners as they look at the technology race to get leg-up.

Tokai Tokyo Intelligence Laboratory’s auto analyst SEG Sugiura said, “For Honda, there is a concern for how to give beef to your four-wheeler business.”

He said, “The fact is that Honda officials wanted to merge with Nissan, which means that he needed a close cooperation at a deep level in R&D compared to the alliance, (in which) sharing information about the confidential company Included, “he said.

Yoshida of Bloomberg said that Nissan’s position is worse, as it “faces important challenges including financial instability, and the advanced technology needs to strengthen its position in the battlefield”.

Mr. Sugiaura said that the tech firm Foxconn “is an option for Nissan”.

Recent reports stated that the veteran of Taiwan, Honorable, was also known as Honorable, was interacting with Renault to buy a French automaker stake in the Japanese firm.

However, Mr. Sugiaura said that a Foxcon-honda tie-up was also possible “because technologies want Honda”.

And he said: “If Honda really wants Nissan’s technology, it can begin a hostile acquisition bid of Nissan.”