2024 is destined to be an extraordinary year for the global automotive industry, and near the end of the year, Honda and Nissan officially announced their merger plan, which has attracted widespread attention inside and outside the industry. This news is not only related to the future development of Japan's two major car companies, but also reveals the trend of drastic changes in the global automotive industry. Under the dual pressure of the new energy wave and global competition, traditional automakers are actively seeking new ways to survive, and the cooperation between Honda and Nissan may be just the beginning of a major reshuffle. China Exportsemi will conduct an in-depth analysis of the hidden industry trends behind this event.
Background and significance of the Honda-Nissan merger
Against the backdrop of slowing market growth and the new energy revolution, Honda Motor Co. and Nissan Motor Co. have proposed a merger to address the challenges of declining profitability, huge R&D investment, and increased market competition. In the first three quarters of 2024, Honda and Nissan ranked 8th and 10th respectively in global sales, and the combined total sales will exceed 5 million units, and are expected to replace Hyundai Motor Group as the world's third largest automaker, behind Toyota and Volkswagen.
On December 23, 2024, Honda and Nissan jointly announced that they have signed a memorandum of understanding (MOU) for the merger, which will result in the establishment of a joint venture into a holding company, in which both companies will become subsidiaries. The two companies are expected to reach a definitive agreement in June 2025, and the new joint venture holding company is scheduled to be listed on the Tokyo Stock Exchange in August 2026.
External competitive pressures and self-operating pressures are also important factors driving the merger. Under the wave of intelligent electrification, Tesla and China's new energy vehicle companies pose a challenge to traditional auto giants, and the market share of Japanese car companies is squeezed. According to the financial report, Honda's net profit in the third quarter of 2024 fell by more than 60% year-on-year, Nissan's revenue fell by 1.3% year-on-year, operating profit fell by 90.2% year-on-year, and net profit fell by 93.5% year-on-year. The merger aims to enhance the competitiveness of both companies in the global automotive market through resource sharing and synergies, especially in the field of intelligent electrification. In addition, Mitsubishi Motors, in which Nissan currently holds a 24% stake, is also considering participating in this business consolidation.
Photo: Honda, Nissan, and Mitsubishi Motors officially announce a memorandum of understanding
The driving force behind the reshuffle of global car companies
1. New energy transition
With the advancement of new energy policies around the world, the market space for traditional fuel vehicles is shrinking rapidly. Judging from the sales statistics of the third quarter of 2024, Chinese car company BYD has become the sixth largest car company in the world with its strong new energy vehicle layout, leading most traditional manufacturers with sales of 1.13 million units, and Geely is also among the ninth largest car companies in the world.
At the same time, Europe's policy guidance has also put tremendous pressure on traditional car companies. The plan to ban the sale of gasoline-powered vehicles in 2035 has made it necessary for major brands to accelerate the transition to electrification, but it has also led to high R&D costs and greater survival challenges for small and medium-sized car companies.
2. Changes in the market landscape
The rise of Chinese automakers in the global market is reshaping the competitive landscape. For example, brands such as Geely and Great Wall not only excel in the domestic market, but also rapidly expand the global market through mergers and acquisitions and international layout.
On the other hand, emerging markets such as Southeast Asia and India have become important battlegrounds for global car companies. In these markets, the traditional advantages of Japanese automakers are gradually being eroded by Chinese and Korean automakers. For example, BYD's market share in Thailand, Malaysia and other places has increased significantly.
3. The impetus for technological change
The rapid development of new technologies such as autonomous driving and Internet of Vehicles requires car companies to have higher R&D capabilities and resource integration capabilities. The development of these technologies is extremely costly and cannot be sustained by a single company. Because of this, huddle heating has become an inevitable choice for traditional car companies.
The possibility of a wave of mergers with Japanese automakers
The merger of Honda and Nissan may be just the beginning of the consolidation of Japanese automakers. Under market pressure and technological challenges, more traditional car companies may seek cooperation. For example, Suzuki and Mazda have already collaborated on shared technologies, while Toyota and Subaru are jointly developing an electric vehicle platform.
In addition, German automakers are facing similar challenges. Volkswagen, BMW, and Daimler have the advantage in terms of technology reserves, but the rapid growth of new energy vehicles requires them to have more flexible market strategies. If the merger of Japanese automakers is successful, this trend may spread to Europe.
Forecast of the global automaker landscape
Short-term effects
- Japanese automakers: The new merged entity is expected to enhance its competitiveness through resource sharing, R&D collaboration, and market integration, especially in the EV market, challenging Tesla and BYD.
- Chinese OEMs: With their strengths in the new energy sector, Chinese OEMs are expected to further expand their market share, especially in Southeast Asia, Europe, and South America.
- Global automakers: German and Korean automakers may come under pressure, especially in the low-to-mid-end market, as they are caught between emerging alliances between China and Japan.
Long-term trends
- Industry consolidation: It is expected that in the next five years, the world's top 10 automakers may be concentrated in the hands of fewer players, forming several super leagues.
- Competitive focus: New energy vehicles and intelligent driving technology will become the core competitive areas of car companies, and the market of traditional fuel vehicles will gradually be marginalized.
- Global presence: China, India and Southeast Asia will become more important, while Europe and North America are likely to be redefined.
Conclusion
The merger of Honda and Nissan is not accidental, but a microcosm of the profound changes that the global automotive industry is undergoing. The new energy revolution, technological progress and intensified market competition have forced traditional car companies to rethink their positioning and development strategies.
In the future, we will see more alliances and collaborations, and we will also witness the rise of new industry giants. In this reshuffle, those car companies that can quickly adapt to change and actively embrace new technologies and new markets will be the winners of the future.
