Honda-Nissan Integration Promises New Boost to Japan's Auto Industry Competitiveness

Honda Motor Company Ltd and Nissan Motor Corporation, two major Japanese automakers, are about to enter negotiations to merge their operations. The two firms are considering establishing a Honda-Nissan holding company and bringing both companies under its umbrella. Nissan is also mulling a future merger with Mitsu bishi Motors, with which it has a business alliance.

Honda and Nissan are weighing the benefits of a merger due to a sense of crisis sparked by fears of emerging competitors. These include Tesla Inc, of the United States and BYD Company Ltd, of China. With their price competitiveness and rapid development speed, the two companies currently dominate the electric vehicle (EV) market.

If the proposed business integration goes ahead, the new company will become the third-largest automaker in the world in terms of vehicle unit sales. It would follow behind Toyota Motor Group and Germany's Volkswagen Group.

Honda and Nissan hope to pool their management resources, including technology. The new partners look forward to developing attractive vehicles and becoming a winning corporate group in the global market.

*Nissan President Makoto Uchida (left) and Honda President Toshihiro Mibe discuss their proposed strategic alliance at a press conference on March 15 in Tokyo.*

Bidding to Catch Up

Japanese carmakers are lagging far behind in the EV market. They are even being forced to scale back their operations in the Chinese market where EVs are rapidly gaining popularity. Also, Chinese EV manufacturers are beginning to make inroads into Southeast Asian markets, where Japanese companies enjoy a large market share.

In August, Honda and Nissan agreed to collaborate in developing EV technology in an attempt to overcome this situation. Adding Mitsubishi Motors to the group is seen as a way to further reduce costs. For example, the three companies could standardize drive device specifications.

In addition, Honda and Nissan have also agreed to jointly develop next-generation "software-defined vehicle (SDV)" technology. This would allow the performance of a car to be improved by rewriting the onboard software, just like a smartphone.

*Toyota Motor Corporation's Lexus EV (provided by the company)*

Toward Decarbonization of Motor Vehicles

EVs are still expensive without subsidies and demand is slowing due to delays in the development of charging facilities. However, the view remains unchanged that EVs are a core technology if we are to decarbonize motor vehicles.

Domestically, the automobile industry remains Japan's largest core industry. The value of manufactured goods shipped exceeds ¥50 trillion JPY ($ USD). Moreover, approximately 5.5 million people are employed in related industries. Japan simply cannot allow the industry to decline.

Fortunately, while EV sales are slowing, hybrid vehicles (HVs), a specialty of Japanese manufacturers, are regaining popularity. This is especially true in the US market. That buys Japanese automakers time during which they can rebuild their EV businesses.

Hopefully, not only Honda and Nissan, but other Japanese automakers will take full advantage of this opportunity.