Recently, the potential merger of Honda and Nissan has sparked attention in the automotive industry. Sales data released on Wednesday, December 25th, indicates that the merger could give these two Japanese car manufacturers the scale needed to compete with the Chinese company BYD.
According to a report by Bloomberg on December 25th, Honda sold 3.43 million vehicles globally in the first 11 months of the year, while Nissan indicated that its sales were slightly above 3 million vehicles. During the same period, their Chinese competitor BYD sold 3.76 million vehicles. This suggests that a partnership between Nissan and Honda could potentially rival BYD.
Both Honda and Nissan would find it challenging to individually compete with Chinese domestic car manufacturers. In November, Honda’s sales in China decreased by 28% compared to the same period in 2023, with production dropping by 38%. Similarly, Nissan experienced a 15.1% decline in sales and a 26% decline in production in China in November.
On a global scale, Honda’s sales in November fell by 6.7% to 324,504 vehicles, with production decreasing by 20.4%. Nissan’s global sales in November decreased by 1.3% year-on-year to 278,763 vehicles, while production took a bigger hit, declining by 14.3%.
Last month, Nissan announced a global job cut of 9,000 positions, approximately 6% of its total workforce, and planned to reduce global production capacity by 20%. They also lowered their annual profit forecast by 70% to 150 billion yen (approximately 9.75 billion USD), marking the second adjustment after a 17% cut earlier this year.
On Monday, December 23rd, Honda and Nissan stated that they are in talks regarding a merger in 2026, marking a historic turning point in the Japanese automotive industry and highlighting the threat Chinese electric car manufacturers pose to Japanese companies.
The CEOs of Honda and Nissan, along with the president of Nissan’s partner Mitsubishi Motors, held a press conference in Tokyo on Monday afternoon. Their goal is to reach an agreement by June next year and establish a holding company in August 2026, with shares of the holding company going public while Honda and Nissan delist.
In terms of car sales, the merged companies would become the world’s third-largest automotive group, behind Toyota and Volkswagen.
Honda’s CEO Takahiro Hachigo mentioned that the development of Chinese car manufacturers and new entrants has brought significant changes to the automotive industry. He emphasized the need to build the capacity to compete with them by 2030 to avoid being surpassed.
A study published in April this year by the Kiel Institute for the World Economy in Germany highlighted how the Chinese government heavily subsidizes domestic industries, particularly in green technologies like electric vehicles and wind power. One of the main beneficiaries of these subsidies is the electric car manufacturer BYD, leading to a significant expansion of BYD’s technology, production capacity, and competitiveness.