Honda, Nissan, Mitsubishi unite against global automotive giants
Honda, Nissan, and Mitsubishi are joining forces to tackle the challenges of the global automotive market. This merger will result in a new Japanese holding company aimed at enhancing the competitiveness of these brands on the global stage. The process is expected to be completed by August 2026, reports rp.pl.
The newly formed holding company aims to bolster the position of Japanese brands in global competition with corporations like Toyota and Chinese automotive giants. The holding will encompass all three companies, which will continue operating independently while retaining their distinct brands. As Toshihiro Mibe, CEO of Honda, highlighted, the new group's initial operating profit is expected to be one trillion yen, with growth prospects reaching three trillion yen in the coming years.
Both Honda and Nissan have been under pressure from Chinese manufacturers, who are increasingly capturing international markets. Nissan's challenges were compounded by unsuccessful investments in the American market and an outdated hybrid model lineup. Meanwhile, Honda had to reduce production in China, and Mitsubishi had to withdraw completely from this market.
According to experts, creating a joint holding company will allow for economies of scale, cost optimisation, and more effective competition with the biggest players in global markets.
Mitsubishi, 24.5% owned by Nissan, has signed an agreement to join the holding. However, details about its role in the structure will be revealed in January 2025. Honda also plans to buy back its shares valued at 1.1 trillion yen, which will strengthen its position in the newly formed group.
Nissan CEO Makoto Uchida noted that the merger does not imply giving up on resolving its own issues. Nissan had previously attempted to implement remedial programmes, but internal problems, including a scandal involving former chairman Carlos Ghosn, hindered these plans. Ghosn, currently residing in Beirut, critically assessed the feasibility of merging the three companies, considering it unprofitable, reports rp.pl.
Layoffs at Nissan
Nissan, the third-largest car manufacturer in Japan, announced in November a reduction in employment by 6.7% and a decrease in global production capacity by 20%, it reports.
The Japanese corporation is facing difficulties for several reasons, one of which is misjudging the demand growth for hybrids in the United States. Unlike Toyota, which is faring better because of this, Nissan, based in Yokohama, is struggling. Nissan's financial situation has not improved because of China's BYD dominance in the Chinese market.
Makoto Uchida, the CEO of the Japanese corporation, admitted to a mistake in forecasting the growth of hybrid car popularity.
Uchida announced the layoff of 9,000 people, which is 6.7% of the company's 133,500 workers worldwide. He will also face consequences voluntarily. Since November, he has been receiving half of his salary. Other executive committee members, as reported by Reuters, have also decided to reduce their salaries.
