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Honda Motor Co . and Nissan Motor Co ., two of Japan's leading automakers, have announced plans to merge under a joint holding company, which will position them as the world’s third-largest automaker by sales, following Toyota and Volkswagen.
The merger, expected to conclude by August 2026, aims to streamline operations and address growing competition, particularly from EV-focused companies like Tesla and BYD. Mitsubishi Motors may join the alliance by January 2025, further expanding the scope of this partnership. ET Year-end Special Reads Gold outshines D-St with 20% returns, but 2025 may be different The year of the pause: How RBI maneuvered its policy in 2024 2024, the year India defeated China's salami-slicing strategy Challenges in the Indian Market While the merger may create global synergies, its impact on Indian operations is uncertain.
Both Honda and Nissan have faced challenges in India, with low market shares and declining domestic sales, as reported by a TOI article authored by Pankal Doval. Honda holds a 1.39% market share, while Nissan has an even smaller slice at 0.
73% in India’s 4-million-unit auto market. Nissan’s Complex Renault Partnership Nissan operates in India through a joint manufacturing venture with Renault at the Oragadam facility near Chennai. This plant, with an installed capacity of 400,000 units, has struggled with low sales and limited market success.
Since 2010, this plant has produced over 2.75 million vehicles since 2010, catering to both domestic and export markets. Renault and Nissan have historically faced differences globally, and the alliance has yet to capitalise on positive opportunities in India.
Nissan saw a 10% drop in domestic sales in FY24, while Renault has faced its own challenges in capturing market share. Nissan's earlier export-oriented strategy has also encountered hurdles. Despite its efforts, questions remain about the future of the Oragadam plant if Renault’s participation in the Honda-Nissan merger is unclear.
As reported by TOI, Nissan CEO Makoto Uchida addressed these complexities during a press interaction in Tokyo, stating, "Synergies with Renault is another possibility we are exploring. With this MoU between Honda and Nissan, we will continue working with Renault based on projects that generate synergies. Irrespective of today's announcement, we will continue to have a constructive discussion.
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The company shut down its Greater Noida manufacturing plant due to poor demand and now operates solely out of its Alwar, Rajasthan facility. Honda’s model line-up, including the Amaze, City, and Elevate, has struggled to keep pace with competitors like Maruti Suzuki, Hyundai, and Tata Motors. Despite these challenges, Honda has reported strong export growth, with a 154% increase this year.
The Elevate SUV has been particularly successful in overseas markets, including Japan. However, Honda’s entry into the EV segment remains delayed, with its first electric vehicle expected only in 2026. Mitsubishi, part of the proposed global alliance, has a negligible presence in India.
Previously partnered with the C K Birla Group, it has been overshadowed by the latter’s tie-up with the French PSA Group to produce Citroen cars. Mitsubishi's limited operations add further complexity to the merger’s Indian implications. The merger could potentially help Honda and Nissan consolidate their operations in India by sharing platforms, expanding product portfolios, and improving cost efficiencies.
Industry experts highlight that such synergies are vital to counter the growing influence of Chinese automakers like BYD in the Indian EV market . An industry insider noted, "Chinese players like BYD are gaining a foothold in India, and the two Japanese giants plan to collaborate on technologies and build on their synergies to compete with Chinese EV players." Japanese Automaker Collaborations This is not the first time Japanese automakers have joined forces.
Toyota and Suzuki entered a global partnership in 2019, sharing platforms and producing cross-badged models in India. However, the Honda-Nissan merger is expected to focus on distinct models catering to different segments while leveraging common platforms. As told to PTI in an earlier interview, Nissan has ambitious plans for the Indian market.
Frank Torrés, President of Nissan India Operations, stated, “Nissan is betting big on India...
and the plans (for India) remain intact despite this global turbulence.” Nissan recently announced plans to launch five new models over the next 30 months, aiming to triple domestic and export volumes to 100,000 units each annually by 2026. The merger’s success in India hinges on resolving uncertainties surrounding Nissan’s Renault partnership and Honda’s struggling domestic presence.
Questions about the future of the Oragadam plant, the role of Renault in the merged entity, and the ability to compete with established players remain unanswered. As Nissan and Honda navigate these challenges, the Indian auto industry will watch closely to see if the merger brings the intended synergies or creates additional operational complexities. (With inputs from TOI) ET Year-end Special Reads An Indian's guide to moving abroad as the world looks for 'better' immigrants The year of the HNIs: How India's rich splurged in 2024 Nominations for ET MSME Awards are now open.
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