Honda-Nissan potential merger amid China competition raises questions about timing | masr356.com

The potential new project of Honda Motor Company and Nissan Motor Company to create a giant Japanese automobile company amid intense competition from Chinese competitors The news agency reported that this raises questions about the timing of the deal Reuters On Wednesday, December 25th.

The two companies said on Monday, December 23, that they will begin formal talks about a potential new venture or merger. According to the news agency, the outcome of the deal is still uncertain because it will depend on Nissan’s progress in its transformation. They aim to finalize the deal by August 2026.

the Japanese The automakers are targeting more than $6.4 billion in collaboration by leveraging a common platform, joint research and development (R&D), and joint procurement. Mitsubishi, Nissan's junior partner, will decide by next month whether or not to participate in the deal, according to the news report.

As the companies aim to achieve operating profits in excess of 3 trillion yen, which represents an increase of 54 percent over their consolidated results for last year, Honda CEO Toshihiro Mebe said in a press conference that the effects of the deal will likely not be felt until after 2030.

He said companies need to build their capabilities to take on Chinese competitors by then, or face “defeat.”

Transaction timing

The agency quoted analysts who questioned the timing of the deal. The biggest concern for both companies will likely be their model lineups, as neither is strong in the electric vehicle space (Eve) slice.

Honda is focusing more on hybrid models and offering the models in the United States, unlike potential future partner Nissan.

“Both companies lack compelling EV offerings, and the combined entity will still face the challenge of a new pipeline of EV models and technology R&D,” Vincent Sun, a senior analyst at Morningstar, told the news agency.

“It may take longer than expected” to repair the work, Sun said.

China competition

China's shift to electric vehicles has seen consumer attention focused on software-driven features and the digital in-car experience, all of which are areas where Chinese automakers excel.

Brands like BYD Other Chinese electric car makers have left legacy automakers behind after introducing electric cars and hybrid cars loaded with high-tech features. Both Japanese companies have lost some ground to Chinese manufacturers in the automobile market.

Honda's quarterly profits fell 15 percent last month, and the company reduced its workforce in China. On the other hand, Nissan announced plans to eliminate 9,000 jobs globally and reduce manufacturing capacity by 20 percent due to declining sales in both China and the United States, the news agency reported.

Senior analyst at Moody's Changing its large operations in China would involve “significant execution risks,” the news agency quoted rating firm Dean Ingo as saying in a research note on Tuesday.

Both automakers are also focusing on the US and Japan. This “significant overlap” means the merger will not bring significant benefits in terms of geographic diversification, the news agency reported. The analyst also stressed that the deal may help companies weather any import tariff headwinds from the incoming Trump administration in the US.

Chinese competition like this represents a technological challenge for legacy companies like Honda and Nissan. If they do not find new partners for expansion, there is a potential risk that they will become smaller companies with higher capital spending and R&D costs per vehicle, according to analysts at Morgan Stanley and stated in the agency's report.