Japanese auto giants join forces for global market resurgence
Honda, Nissan, and Mitsubishi are joining forces to tackle challenges in the global automotive market. This merger will result in a new Japanese holding company designed to enhance these brands' competitiveness on the international stage. The process is expected to be completed by August 2026, according to rp.pl.
The newly formed holding company aims to strengthen the position of Japanese brands in global competition against corporations like Toyota and Chinese automotive giants. The holding will encompass all three companies, continuing to operate independently while maintaining their unique brands. Toshihiro Mibe, CEO of Honda, highlighted that the new group's operating profit will initially be approximately C$9 billion, potentially increasing to C$27 billion in subsequent years.
Both Honda and Nissan have been facing pressure from Chinese manufacturers, who are increasingly capturing international markets. Nissan's troubles have been exacerbated by unsuccessful investments in the U.S. market and an outdated hybrid model lineup. Meanwhile, Honda was forced to cut production in China, and Mitsubishi fully withdrew from the Chinese market.
Experts believe that forming a joint holding company will facilitate economies of scale, cost optimization, and more effective competition with the largest players in global markets.
Mitsubishi, in which Nissan owns a 24.5% stake, has signed an agreement to join the holding, but details regarding its role within the structure will be disclosed in January 2025. Honda also plans to buy back shares worth approximately C$9.9 billion, strengthening its position in the newly established group.
Nissan CEO Makoto Uchida noted that the merger does not mean abandoning efforts to fix its own business. Nissan had previously attempted to implement recovery programs, but internal problems, including a scandal involving former chairman Carlos Ghosn, hindered these plans. Ghosn, currently in Beirut, criticized the merger's rationale, calling it unprofitable, according to rp.pl.
Layoffs at Nissan
Nissan, the third-largest car manufacturer in Japan, announced in November a reduction in employment by 6.7% and a 20% cut in global production capacity, as stated in the report.
The Japanese corporation faces several challenges, one being the miscalculation of the growth in demand for hybrids in the United States. Unlike Toyota, which is managing this better than the Yokohama-based company, Nissan's financial situation is not improving due to the dominance of Chinese BYD in the Chinese market.
Makoto Uchida, the CEO of the Japanese corporation, admitted to misjudging the rise in popularity of electric-gasoline-powered vehicles.
Uchida announced the layoff of 9,000 people, or 6.7% of the company's 133,500 employees worldwide. He too will "voluntarily" face the consequences. Since November, he has been receiving half of his salary. Other executive committee members, as reported by Reuters, have also decided to reduce their salaries.
