Nissan Rallies Strongly On Merger Talks With Honda
Nissan Motor’s stock price jumped Wednesday after a media report claimed that the financially troubled Japanese automaker is considering merging with Honda Motor to create a larger company that can take on bigger competitors and expand the electric vehicle market.
Nissan’s stock was up 20% at the time of this publication. According to a report in the Nikkei newspaper, Honda and Nissan are about to sign a memorandum of understanding and plan to operate under a holding company.
Additionally, they hope to eventually include Mitsubishi Motors, of which Nissan is the largest shareholder with a 24 percent stake, under the holding company, the report states. If the merger goes through, Nissan will particularly benefit. In the face of intense competition in its main markets, Nissan had previously announced plans to cut 9,000 jobs and reduce global production capacity by a fifth.
The two Japanese automakers formed a strategic alliance based on shared software and automotive components.
Since Fiat Chrysler merged with France-based PSA Groupe to form Stellantis in January 2021, this partnership would be the biggest merger in the automotive industry. One of the challenges facing the global auto industry is the shift to electric vehicles (EVs), a market dominated by companies like China’s BYD and Tesla.
Volkswagen intends to shut down factories and eliminate thousands of jobs in Germany, and General Motors recently announced the closure of Cruise, its autonomous robotaxi business.
President-elect Donald Trump’s proposed tariffs are another risk for Nissan and Honda.
Nissan said there is no official announcement from the company to support media reports that it is “considering a business integration” with Honda. Nissan stated that it has not yet decided to evaluate several potential future partnerships with Honda and Mitsubishi
Nikkei report highlighted that the combined Nissan-Honda-Mitsubishi company would sell over 8 million cars annually. The company would rank among the biggest automakers in the world.
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