Can the Merged Honda-Nissan Reverse the Tide of Electrification?

On December 23, Honda and Nissan announced their merger, a move that has sent shockwaves through the global automotive industry. This merger is not just a strategic maneuver to cope with the accelerating trends of electrification and intelligent driving technologies but also marks a significant transformation in the global automotive landscape. The combined company is expected to become the third-largest automaker in the world, and this merger will undoubtedly have a far-reaching impact on the global automotive sector.

In the context of rapidly advancing electrification, intelligence, and new energy technologies, the global automotive industry is undergoing unprecedented change. For Honda and Nissan, continuing to operate independently is no longer a viable option in the face of such enormous technological and market shifts. In particular, their competitiveness in electric vehicles (EVs) and autonomous driving technologies has been steadily eroded by new players like Tesla. The decision to merge may appear to be a pursuit of scale, but in reality, it is a desperate bid for survival in the midst of this transformation.

The merger between Honda and Nissan is not merely about resource consolidation; it also represents a complementarity of technology and production capabilities. Honda has accumulated significant expertise in hybrid technology in recent years, while Nissan has a solid foundation in electric vehicles. By merging, the two companies can more quickly develop and deploy electrified and intelligent products, boosting their competitiveness in the global market. Rather than being a purely strategic alliance, this merger can be viewed as both companies "banding together" for survival.

Behind this merger lies the dilemma faced by Japanese automakers in the world’s largest automotive market—China. In recent years, the rise of domestic electric vehicles in China has significantly squeezed the market share of foreign brands, particularly Japanese automakers. Both Honda and Nissan have had to scale back production and lay off workers in China, while Mitsubishi has nearly exited the market entirely. These moves highlight the increasing marginalization of foreign automotive brands in China. The rapid adoption of electric vehicles and the rise of domestic brands in China have led to the shrinking demand for traditional gasoline vehicles, while the demand for hybrid vehicles remains underdeveloped. In contrast, Toyota has managed to stabilize its market share with its strong hybrid technology, while Nissan has clearly lost its competitive edge in this battle. Through their merger, Honda and Nissan hope to leverage each other’s technological advantages to strengthen their position in China, especially in the electric vehicle sector.

In the North American market, Honda and Nissan have performed relatively well, but they are still facing considerable challenges. The resurgence of hybrid vehicle sales has benefitted brands like Toyota, while Nissan, with its aging product lineup, missed this opportunity. Meanwhile, the electric vehicle market is becoming increasingly competitive, with new entrants like Tesla quickly gaining market share. Through their merger, the two companies can pool their research and development resources and jointly launch competitive hybrid and electric vehicles to capture a larger market share.

However, whether the merger will truly enhance their competitiveness remains uncertain. The cultural, managerial, and product positioning differences between the two companies could present significant challenges during the integration process. The merger involves not only sharing resources and technologies but also aligning company cultures. How well they manage to achieve efficient collaboration will be critical to the success of the integration.

It is also worth noting that Mitsubishi Motors may join the merger. As a strategic partner of Nissan, Mitsubishi has deep expertise in the automotive industry, and its inclusion in the merger could play a crucial role. If Mitsubishi joins, the scale and market share of the combined Honda-Nissan group will expand further. This alliance would not only enhance their technological research and development capabilities but also give them stronger competitiveness in global markets.

The merger between Honda and Nissan represents a new chapter in the global automotive industry, ushering in a period of heightened competition among traditional automakers. This trend of mergers and restructuring is expected to intensify market competition in the coming years. For other car manufacturers, the key challenge will be how to respond to this new competitive landscape—capturing the opportunities offered by electrification, intelligent driving, and other technological advances, while maintaining stability in the traditional gasoline vehicle market.

Competition will undoubtedly become more intense, and only those companies that can precisely seize opportunities in technology, production, and market strategy will be able to emerge victorious in this global automotive battle.