Proposed Honda-Nissan Merger Could Change Auto Industry Landscape
Date
12/19/2024 7:05:25 PM
(MENAFN- Asia Times)
In a watershed for the Japanese auto industry, Honda and Nissan are expected to start negotiating a merger next week. The two companies, both of which have been overtaken by BYD and which, combined, sell fewer than three-quarters as many vehicles as Toyota, hope to stage a recovery by combining their technologies and achieving greater economies of scale.
But the plan looks like a throwback to Japan Inc's downsizing of sunset industries in decades past, and a knee-jerk nationalistic reaction to Foxconn's interest in acquiring a stake in, or even taking over, Nissan. Foxconn is the international brand of Taiwan's Hon Hai Precision Industry.
The verdict of the stock market was swift and clear. The proposed merger was headline news on the morning of Wednesday, December 18; by the time the market closed, Honda's stock price was down 3%, while Nissan's was up 24%. Put into words, this is a bailout: a windfall for Nissan, bad news for Honda's shareholders. The stock price of Renault, which owns 17.0% of Nissan directly and 18.7% through a trust, was up 5%. Hon Hai's was down 1%.
Honda and Nissan, both of them auto industry leaders in the past, have fallen far behind Toyota, Tesla and BYD in the markets for electric and hybrid vehicles. Data for the three months to September show BYD overtaking Honda and Ford to become the world's sixth largest automaker in terms of number of vehicles sold. Perhaps even more humiliating, Chinese automaker Geely (which owns Volvo) overtook Nissan to rank ninth.
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