Amidst a rapidly changing landscape in the global automotive industry, a recent rumor regarding a possible merger between Honda and Nissan attracted significant attention on December 18. The speculation suggested that these two automotive giants were in talks to establish a holding company, with the potential inclusion of Mitsubishi Motors, which Nissan has a 24% stake in and is its largest shareholderIf these discussions were to culminate in a successful merger, the combined annual sales of the three companies could exceed 8 million vehicles, positioning them as the world's third-largest automotive group.

However, both Honda and Nissan quickly responded to inquiries from the media categorically stating that this information did not originate from official communications from either company

Despite ongoing discussions about future collaborations among Honda, Nissan, and Mitsubishi, no definitive decisions had been made as of yetNonetheless, the market sentiment reacted strongly to the merger rumors, resulting in significant fluctuations in stock prices for these automakersOn Wednesday, Nissan's stock surged more than 20%, while Mitsubishi's stock also saw a similar increase, reaching its upper trading limit, in stark contrast to Honda's stock, which initially fell by 3.4%.

The Executive Vice President of Honda, Shinji Aoyama, acknowledged the rumors stating that Honda is indeed exploring several options, including merger, capital cooperation, and the establishment of a holding company.

In 2023, collaboration among Japan's automotive trifecta—Honda, Nissan, and Mitsubishi—has increasingly intensified

In March, Nissan and Honda signed a memorandum of understanding to collaborate on electric vehicle initiatives, including joint procurement, shared development of power platforms, and standardizing partsThe aim was to reduce costs and enhance the competitiveness of their electric vehicle offeringsBy July, Mitsubishi joined the Honda-Nissan alliance, and plans were set to standardize in-car software across their vehicles, initially implementing this technology in Mitsubishi models while also exploring opportunities for complementary vehicle line-upsIn August, the companies further participated in signing a strategic cooperation memorandum, focusing on electric vehicles and smart technologies, together bearing research and development costs against competition from Chinese automakers while accelerating efforts toward carbon neutralitySubsequently, in November, Mitsubishi and Nissan reached an agreement to establish a joint company aimed at providing services related to self-driving technologies and utilizing electric vehicle batteries as storage solutions

This new entity is expected to be operational by March 2025, with both companies maintaining equal ownership.

Currently, the global automotive industry is undergoing a significant structural transformation marked by technological innovation and a reshaping of market participantsCompanies like Tesla represent a pioneering front in electric vehicles while Chinese automakers have steered the momentum toward electrification and smart technologies, which has profoundly impacted traditional Japanese manufacturersData illustrates this stark reality: during the first half of 2024 (from April to September), production from Japan's eight major automakers is projected to hit only 11.878301 million units, reflecting a significant year-on-year decrease of 6%. This decline marks a notable milestone, being the first time since the pandemic hit in 2020 that Japanese manufacturers have experienced a year-on-year production decrease during the first half of the fiscal year

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Breaking it down further, Toyota’s production fell by 7% to 4.705 million units; Honda's output decreased by 8.1% to 1.817 million units; while Nissan's production dipped by 7.8% to 1.5325 million units.

In China, the market share of Japanese brands has been on a downward trajectory for three consecutive years, plummeting from 24.1% in 2020 to 17% in 2023. Statistics from the China Passenger Car Association revealed that in November, Honda's sales within China totaled 76,773 units, marking a steep year-on-year decline of 28.02%. Meanwhile, Nissan's sales, including both passenger and light commercial vehicles, registered 63,545 units, reflecting a 15.14% drop compared to the previous year.

In November, only Toyota witnessed a rebound in sales in China, with figures reaching 176,000 units, reflecting a year-on-year growth of 7%. The uplift in sales can be attributed to China's policies promoting vehicle exchanges and the introduction of new Toyota models, breaking the company’s nine-month streak of year-on-year declines.