Honda and Nissan hold merger talks

CGTN Europe

Honda and Nissan are discussing a possible merger, which if it happens, would create the world’s third largest car company.  It’s seen as a response to increased global competition in the electrical vehicle market dominated by firms outside of Japan.

Transcript

00:00Well both companies were founded in Japan, Honda in 1948, Nissan in 1911, and for many people the

00:06first car that they would have ever had would have been made by one of these two companies,

00:11and today they're still both headquartered in Japan, but they do have global manufacturing,

00:16research and development bases all across the world, so Asia, North and South America and

00:22Europe as well, and between them they've got around 330,000 employees. In terms of production

00:28volume, last year Honda and Nissan sold 7.35 million vehicles globally, and Honda just

00:36responsible for a little bit more than Nissan at 54% of that amount. In terms of customers,

00:44their bases, their biggest markets are in the USA, that's around a third of sales,

00:48that's followed pretty closely actually by China, then slightly behind that's Japan, and then

00:53in Europe just 2% of sales for Honda there, but 10% for Nissan. In terms of the types of vehicles

01:01that they make, I suppose like all legacy companies, you know petrol and diesel is what

01:06they're traditionally known for over the years, but while Nissan has been one of the pioneers

01:12in electric vehicles, mass market EVs, Honda has been a little bit slower. Initially it focused on

01:19hybrids, which has been successful, but now they're aiming to produce over 2 million electric

01:25vehicles annually by 2030, and to only sell EVs and fuel cell vehicles by 2040. Meanwhile Nissan

01:34wants EVs and hybrids to comprise 60% of its global sales by 2030. We've been droning on about

01:41the rise of EVs seemingly forever, why this merger discussion now? Well it comes down to competition,

01:48both of these two firms, although huge, have been struggling somewhat in China, of course China

01:54being the world's largest auto market, they were kind of caught out a little bit by the rapid shift

02:00there to EVs and to hybrids, and last month Honda was forced to revise down its profits for this

02:07year, Nissan announcing last month too that it was implementing a 2.6 billion dollar cost saving plan

02:16due to the amount of debt that they have. Now in terms of economies of scale, a merger would create

02:22a 54 billion dollar company, that would make it the world's third largest auto group by vehicle sales,

02:30and of course those higher production volumes would reduce the cost per unit, and that's

02:35especially important in competitive markets like electric vehicles, and of course with governments

02:41being increasingly strict about net zero targets, bringing that initial cost down is very very

02:48important. So this year we've seen the two companies growing a lot closer, since March they've been

02:53collaborating in electrification technologies, so they've been looking to share those development

02:59costs, and we know that Tesla and a number of Chinese car makers are really leading the way,

03:05particularly in autonomous vehicles, and so joining forces will hopefully just sort of give

03:10them that the financial resources that they need to keep up in this market.

Category

Transcript

Recommended