Why Honda Is Merging With Nissan: Factories, Suvs, And China

Honda’s imaginable merger pinch Nissan would correspond 1 of nan largest shake-ups to nan manufacture since nan creation of Stellantis successful 2021. But location are immense risks involved, too.

On Tuesday successful Las Vegas, during a roundtable chat pinch premier media, Honda executives offered immoderate overmuch penetration into nan merger, including really combining resources and factories could thief nan companies enactment competitory successful nan progressively costly conflict pinch China.

Honda is concerned astir China’s meteoric emergence arsenic a ascendant and highly competitory subordinate successful nan EV and autonomous driving space. In precocious December, erstwhile Honda and Nissan announced that they had signed a memorandum of knowing to create an automotive institution worthy astir $50 billion, Honda CEO Toshihiro Mibe said that nan “rise of Chinese automakers and caller players has changed nan car manufacture alternatively a lot... We personification to build up capabilities to conflict pinch them by 2030, different we’ll beryllium beaten.”

The stakes are high, too. According to a caller study by S&P Global Mobility, nan world EV marketplace will move astir 30 percent twelvemonth complete year, pinch 89.6 cardinal caller EVs expected to beryllium sold this year. According to Allied Market Research, nan world autonomous conveyance marketplace is expected to scope astir $60.3 cardinal successful 2025 and is projected to scope $448.6 cardinal by 2035. If nan Japanese automakers want to proceed to predominate nan marketplace arsenic they personification since nan 1960s, they personification to iterate quickly and get products into consumers’ hands. 

“Since nan opening of past year, we’ve been successful reside pinch Nissan,” Noriya Kaihara, caput and executive vice president astatine Honda, said done a translator pursuing nan company’s debut of 2 “production prototypes,” nan Honda 0 Saloon and nan Honda 0 SUV astatine CES. “Nothing has been decided but we’ve been discussing really to proceed.” 

Honda wants Nissan’s ample SUVs and underutilized factories

During nan roundtable, Kaihara said that Honda is looking astatine Nissan arsenic a measurement to trim costs astir early software-defined vehicles (SDV). 

“We personification important labour and betterment costs, and if location are operations we could share, that would beryllium bully for us,” he said. Developing brand-new software, he continued, including precocious driving systems that move personification to autonomous vehicles and battery-electric vehicles, is immoderate progressively important for nan longevity of established automakers and progressively expensive.  

Honda too said that Nissan’s ample SUVs for illustration nan Armada and Pathfinder make it an charismatic partner. Toshihiro Akiwa, VP and caput of Honda’s BEV betterment center, said done a translator that Honda’s hybrid exertion is coagulated but only presently exists successful its midsize vehicles for illustration nan CR-V and nan Accord. The institution is consenting successful Nissan’s larger vehicles because Honda’s “motor and artillery capacity tin beryllium adapted to nan larger vehicle.”

While Honda does personification nan Prologue, that conveyance was information of a $5 cardinal associated task pinch GM that only lasted done nan betterment of 2 vehicles. The Prologue has been a astonishment EV hit, trading complete 33,000 successful 2024 and outselling nan larger gas-powered Honda Passport.

Since nan business pinch GM went south, it’s not apt that nan Prologue will beryllium successful accumulation long, though Honda has made nary announcements astir its plans for nan vehicle. Honda does not presently relationship an all-electric crossover extracurricular of nan Prologue, though fans of nan marque personification been asking for an all-electric CR-V for years. 

Nissan, connected nan different hand, saw its net diminution by arsenic overmuch arsenic 90 percent past year, forcing it to laic disconnected thousands of employees. The institution has been struggling since nan apprehension of erstwhile Nissan CEO Carlos Ghosn successful 2018 for financial misconduct. Unsurprisingly, Ghosn isn’t pleased astir nan news, telling Bloomberg that Nissan was successful “panic mode,” calling nan deal a “desperate move” and noting that nan “synergies betwixt nan 2 companies are difficult to find.”

But arsenic Honda executives astatine nan roundtable noted, Nissan’s struggle could airs an opportunity for Honda, too. That’s because Honda plants that work nan US are presently moving astatine maximum capacity, and they could usage nan excess capacity astatine Nissan’s factories to meet customer demand. “I’m not successful a position to make remark [on Nissan], but they personification capacity,” Kaihara said.

Trump’s tariff threats and nonaccomplishment of EV incentives

President-elect Donald Trump’s threats to enforce tariffs connected overseas imports and destruct nationalist subsidies that personification helped prevention Americans billions successful EV costs too came up successful nan conversation. “If Trump impacts early authorities strategy we personification to beryllium very elastic erstwhile nan subsidies are trim aliases stopped,” Kaihara said. 

That includes wherever Honda builds and produces its astir celebrated vehicles for illustration nan CR-V and Civic. “Each mill successful Canada and Mexico is almost to afloat accumulation level,” Kaihara said. “It’s not truthful easy to alteration that direction, but depending connected nan tariff situation, we mightiness personification to alteration nan accumulation location to Japan aliases location else.” 

A important move for illustration that would beryllium costly and could construe to accrued prices for consumers erstwhile they spell to bargain their adjacent Honda.  

In spite of each this, Honda is not wavering connected its committedness to electrification. “For nan clip being, we will personification caller EVs successful nan adjacent twelvemonth for nan Zero series,” Kaihara said. “For nan agelong term, I think, considering nan biology issues, EVs will beryllium nan solution for nan future, and that will not beryllium changed.”