Following the merger, Honda-Nissan will emerge as the 3rd largest carmaker in the world in terms of overall sales
Discussions are currently underway for the merger of Honda and Nissan. Working together, Honda-Nissan will have improved cost efficiencies and production capacity. They will be in a better position to tackle the threat from China-based EV manufacturers. If things go smoothly, the Honda-Nissan merger could be completed by 2026.
Demand to buyout Renault’s stake
A new report claims that Honda has asked Nissan to resolve its existing alliance with Renault. That will require Nissan to buy out Renault’s stake in the company. As of now, Renault has a 35.7% share in Nissan. That makes Renault the largest single shareholder in Nissan. At its peak, Renault’s share in Nissan was at 43%. However, it has dropped now due to multiple share sales transactions during 2023 and 2024.
Neither Honda nor Nissan have made any official statements regarding the buyout of Renault’s stake. The amount involved is huge (Rs 31457 Crore), which can be a major challenge for Nissan to overcome. Nissan’s financials are not so great right now. In the first half of the Japanese financial year (April 01 to September 30), the company registered an operating profit margin of just 0.5%. That’s a YoY negative growth of around 90%, as compared to the numbers in the previous financial year. This data indicates that Nissan currently may not have the cash or cash equivalents to buyout Renault’s share.
However, it is not certain if this demand is a prerequisite for the Honda-Nissan merger to be finalized. Honda could be concerned about Renault’s stake in Nissan, as foreign entities may be looking into buying these shares. For example, reports reveal that Taiwan-based Foxconn is looking to acquire Renault’s share in Nissan.
Foxconn is a leading manufacturer of electronic products for top brands such as Apple, Microsoft, Dell, Sony, Google, Amazon, Nintendo, etc. Foxconn’s interest in Renault’s share is because the company wants to enter the EV business. Foxconn’s initial discussions with Nissan had failed to arrive at a mutually beneficial deal.
Honda-Nissan merger – Not a bailout
While it may appear that Honda may be trying to bail out Nissanboth brands have dismissed such claims. The reality is that the merger will happen only if Nissan manages to overcome its financial troubles. In a recent media conference, Honda CEO Toshihiro Mibe had said that the merger will not go forward unless turnaround measures being taken are successful. The success of these initiatives is the primary prerequisite for the merger. Toshihiro said that the merger deal will aim to create an ecosystem where both brands can thrive. Unless that happens, it will be difficult to achieve common goals.
The Renault–Nissan–Mitsubishi Alliance began with Renault and Nissan coming together in 1999. Mitsubishi joined later in 2016. This alliance works through a cross-sharing agreement and is not a conventional merger or acquisition.
