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.
It’s seen as a response to increased global competition in the electrical vehicle market dominated by firms outside of Japan.
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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.