The Japanese are creating an automotive monster. A merger of giants on the horizon

Honda and Nissan plan to begin negotiations on a potential merger that could completely change the balance of power in the global automotive industry. As reported by Nikkei, the companies are considering establishing a holding company that will also include Mitsubishi Motors, in which Nissan holds a 24 percent share. The merger of these three brands would give the new entity the ability to sell over 8 million cars a year, which would make it one of the largest manufacturers in the world – after Toyota and Volkswagen.

Strategic cooperation between Honda and Nissan

Although representatives of Honda and Nissan have not officially confirmed the information about the ongoing talks, they have already announced strategic cooperation in sharing car parts and software this year. The potential merger would be a response to growing competition from Chinese car manufacturers and American Tesla.

Market experts emphasize that mergers and acquisitions are becoming a key tool in the fight to maintain a position on the dynamically changing automotive market. The new holding could significantly reduce production costs and accelerate technology development, which would increase its chances of competing on the global market.

Honda and Nissan vs. Tesla

Honda’s current market capitalization is $39.06 billion, down from early 2011 when it was valued at over $78 billion. Nissan, currently valued at $9.95 billion, has also been in decline for more than a decade – at its peak it was worth more than $54 billion.

For comparison, the American Tesla achieved a capitalization of USD 1.54 trillion, which is almost forty times the value of Honda. This shows how much traditional automotive brands are losing in the eyes of investors to innovative companies specializing in electric vehicles.