In a landmark move, Honda and Nissan are planning to merge to combat growing competition from the Chinese automotive sector. The merger, which would also include Mitsubishi—a company partially owned by Nissan—aims to create a powerhouse capable of standing alongside global giants like Toyota, Volkswagen, General Motors, and Ford.
A Strategic Response to Chinese Market Dominance
The decision stems from increasing pressure on traditional automakers from Chinese electric vehicle (EV) manufacturers. Honda’s CEO, Toshihiro Mibe, highlighted the urgency of the situation, stating that the partnership is essential to "fight back" against the "rise of Chinese power" in the auto industry.
“By 2030, we must have a solid plan in place to remain competitive, or we risk being overshadowed by emerging players,” Mibe said during a press conference. The proposed merger could result in a multibillion-dollar agreement designed to pool resources and share expertise, ensuring the three companies remain competitive against rivals such as Tesla and BYD.
The Growing Threat of Chinese Electric Vehicles
Chinese EV makers, including BYD, have rapidly expanded their market share by leveraging lower manufacturing and labour costs, enabling them to price vehicles more competitively. This efficiency has made Chinese brands increasingly appealing to global buyers, propelling China to the forefront of EV production and solidifying its position as the world’s largest producer of electric vehicles.
In response to this dominance, European Union officials in October imposed significant tariffs on Chinese EV imports, raising rates from 10% to 45% for the next five years. While this move seeks to level the playing field, it has sparked concerns over potential price hikes for consumers.
Honda, Nissan, and Mitsubishi: Strength in Unity
Together, Honda and Nissan reported combined sales exceeding $191 billion in 2023, according to Nissan’s CEO, Makoto Uchida. The merger would allow the three companies to pool resources, streamline production, and collaborate on key EV technologies, such as battery development.
In March, Honda and Nissan announced a strategic partnership to explore collaboration in EV production, which was expanded in August to include advancements in battery technology. This proposed merger builds on that foundation and reflects the companies’ shared vision of a more resilient future.
“We need the capabilities to fight back against emerging forces,” Mibe explained. “This is not a bailout for Nissan but a strategic move to secure our place in a rapidly evolving industry.”
Challenges Ahead: Nissan’s Turnaround and Political Scrutiny
While the merger promises long-term benefits, significant challenges remain. Nissan has faced declining sales in key markets such as China and the U.S., leading to substantial workforce reductions. In November, the company announced a 9,000-job cut as part of a broader effort to reduce global production by 20%.
Nissan’s struggles also stem from years of instability following the arrest of its former CEO, Carlos Ghosn, in 2018 on charges of financial misconduct. Ghosn, who fled to Lebanon in 2019, recently criticized the merger plans, calling them an act of "panic and desperation."
In addition, the deal is likely to face intense political scrutiny in Japan. Concerns over potential job losses and the unraveling of Nissan’s existing alliance with French automaker Renault could complicate the merger’s execution.
A Vision for the Future
Despite these hurdles, the merger signals a bold step toward securing a competitive edge in an industry increasingly dominated by EV technology and Chinese innovation. By uniting forces, Honda, Nissan, and Mitsubishi hope to position themselves as leaders in the next generation of automotive innovation.
As global competition intensifies, the partnership could mark a turning point for the Japanese automotive sector, ensuring its resilience and relevance in a rapidly changing market.