‘Tumultuous’ doesn’t oversell the state of the car industry in 2024. Across the world, manufacturers are having to manage electrification, changing customer uses and tastes, the influence (some might say impact) of China, mandates, quotas, regulations, the spectre of tariffs in the US… it’s a lot. And just when it seemed like a momentous year was just about done as far as significant news was concerned, Nissan and Honda - two titans of Japanese car making - have signed an additional Memorandum of Understanding ‘to start discussions and considerations toward a business integration between the two companies through the establishment of a joint holding company.’ It follows a similar agreement in March around vehicle intelligence and electrification, which seemingly didn’t go far enough. Closer collaboration is being called for, which could result in a combined organisation that would rank third in global sales volumes, behind Toyota and VW.
Nissan in particular is enduring a very rough patch, with a plummeting market share in North America (its biggest market), declining numbers in China and a severe drop in profits for this year against 2023 as well. Even with some recent redundancies, it’s a miserable situation as far as money-making is concerned. The struggle for Nissan is much as it is for many others in a topsy-turvy environment, with an unclear strategy on electrified cars.
Which seems pretty remarkable for a company that created the Leaf as early as it did, but the second generation model will be eight years old in 2025 - a lifetime in EV terms. It is long overdue replacement, especially as the much newer Ariya hasn’t made any great headway in the EV SUV space. The ePower technology found in the Qashqai and X-Trail, where an electric motor drives the car but is charged by a combustion engine - which isn’t dissimilar to the Honda HEV setup - looks a bit outdated when so many SUV rivals have opted for plug-in hybrid technology instead. At launch in 2022, then-European product strategy boss Arnaud Charpentier suggested that plug-in hybrids wouldn’t last very much longer. Many others seem to think differently.
While Honda is faring a little better of late - Nissan’s share price climbed in light of the rumoured tie-up; Honda’s dipped - it too has been slow to adapt to the realities of the current carmaking world. The e was cute, but expensive for an EV that didn’t go very far; the e:Ny1 is all too similar, without the cute bit. We all still rave about the Civic Type R, the Jazz will still sell by the boatload and America loves the Accord, but no one could claim to be greatly moved by a parade of HRVs, CRVs and ZRVs.
So the new arrangement proposes quite a lot. It needs to. Collaboration is key, of course, to achieving goals faster and more efficiently, so a lot of shared resources seems likely. The official aim is to work towards a carbon-neutral and zero-traffic-fatality society through vehicles defined by their software, which sounds an almighty task. Clubbing together to create the required architecture will surely mean they can happen sooner. China is very much leading the way when it comes to software, and its role will only become more important; if this deal progresses, it will have to be one of the top priorities.
Related to which, it has been suggested that interest from Foxconn - a giant Taiwanese consumer electronics company - in Nissan has sped up this Honda arrangement. Though restructuring isn’t exactly encouraged in Japan (think of the hoo-hah when Nissan and Renault had closer ties), it’s deemed preferable to overseas investment.
Today’s announcement suggests that if the right synergies are identified and actioned soon enough, a world-class ‘mobility company’ could aim for sales revenue exceeding 30 trillion yen and profit of more than three trillion yen. Respectively, those figures are currently £150bn and £5bn. Lofty ambition, then, but there are also big plans afoot: ‘mutual complementation’ of the entire range lineups, so standardising platforms across both brands and all powertrains to reduce cost, combining R&D efforts, ‘optimising’ their manufacturing facilities (i.e. closing a few) and streamlining the supply chain are just the start.
If not in the best of health right now, both Honda and Nissan have huge global infrastructure and expertise to draw upon and take advantage of. Working together on the same thing should reap obvious benefits - even if efficiency improvements throughout the process, from factories to new car finance, will inevitably mean some job losses along the way. Today’s news also mentions the ‘establishments of a talent foundation for intelligence and electrification’, which is encouraging, though it seems unlikely that every person currently involved with both brands will be required going forward, particularly given the focus on streamlining and efficiency.
For now, the proposed next steps include the formation of a holding company through a joint share transfer that will be subject to approval at the next AGM. Then it will be subject to approval from the relevant authorities before Operation Save Nissan (the working PH title) can commence. But that’s very much the plan. Nissan Director, President and CEO Makoto Uchida said: "Today marks a pivotal moment as we begin discussions on business integration that has the potential to shape our future. If realized, I believe that by uniting the strengths of both companies, we can deliver unparalleled value to customers worldwide who appreciate our respective brands. Together, we can create a unique way for them to enjoy cars that neither company could achieve alone." So 2025 looks like being an even more important year for Nissan than ‘24 was; answers on a postcard now for the weird name the Honda-Nissan holding company will get…
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