Honda Motor Co. and Nissan Motor Co. experienced stagnation or declines in global vehicle sales in 2024, highlighting the necessity for a merger to counteract their diminishing market shares. Honda’s sales fell by 4.6% to 3.8 million units last year, with production decreasing by 11% to 3.7 million vehicles. Meanwhile, Nissan’s sales, as a smaller Japanese competitor, dropped by 0.8% to 3.3 million units, and its output fell by 8.7% to 3.1 million units. The annual reports from both automakers emphasized Honda’s interest in merging with Nissan to create a formidable global entity capable of competing at the highest levels of the automotive industry. Individually, they cannot compete with BYD Co., which sold 4.3 million cars last year, but together they could be more competitive.
In December, Honda and Nissan announced plans to consolidate both brands under a single holding company. If Mitsubishi Motors Corp. joins the alliance, the combined entity could potentially sell around 8 million cars annually, matching their collective sales in 2024. This would position them closer to industry leaders Toyota Motor Corp. and Volkswagen AG, which sold 10.8 million and 9 million cars, respectively, last year. However, the partnership is not guaranteed. Given Nissan’s financial difficulties, Honda has emphasized that stability is essential for any collaboration. There are concerns about whether Nissan’s recent operational streamlining efforts are sufficient, especially as the company has resisted closing factories.
In China, both automakers faced fierce competition, with Nissan’s sales declining by 12% and production by 14% last year. Honda’s performance was even worse, with a 35% drop in production and a 30% decrease in sales. In North America, Nissan’s situation improved slightly, with a 2.8% increase in sales, although production fell by 13.3%. Meanwhile, representatives from Renault SA, which holds a 36% stake in Nissan, visited Japan to express concerns about the merger and ensure the value of Renault’s investment is recognized. Following disappointing quarterly earnings, Nissan announced plans to cut 9,000 jobs and reduce production capacity by 20%. Poor sales in the US and China led the company to lower its annual profit forecast by 70%. In response, Honda proposed a merger with Nissan, effectively aiming to take over the struggling automaker, with plans to present a framework for the deal in the near future.