Hon Hai’s approach prods Honda-Nissan merger talks
TOKYO, Dec. 19 — Japan’s Honda Motor Co. and Nissan Motor Co. accelerated preparations for negotiations including on their possible business integration after Taiwan’s Hon Hai Precision Industry Co. approached Nissan for a capital partnership this autumn, it has been learned.
Former Nissan official Jun Seki, now Hon Hai’s chief strategy officer for the electric vehicle business, was involved in this move by the Taiwanese company, informed sources said. Seki left the Japanese automaker after he battled Nissan President Makoto Uchida for the top post at the firm in 2019.
Nissan needed to start business integration talks with Honda early in order to prevent Hon Hai from meddling in its management, according to the sources.
READ: What a merger between Nissan, Honda could mean for automakers
Meanwhile, advancing cooperation in the field of hybrid vehicles could be a focus in the Honda-Nissan negotiations, analysts say.
It has been reported that the two companies are considering collaboration, including their possible business integration. Mitsubishi Motors Corp., another Japanese automaker, may also join the potential business integration, according to media reports.
Honda, having strength in hybrid vehicles, and Nissan, which reviewed its relations with French partner Renault SA last year, have already been in talks mainly on joint development of electric vehicles and self-driving technologies.
Nissan’s earnings are deteriorating due to the lack of popular hybrid vehicle models in the North American market, which is logging brisk hybrid vehicle sales while gradually shifting to EVs.
If hybrid vehicle cooperation between Honda and Nissan progresses, that could be regarded as a rescue of Nissan by Honda, industry sources say.
Due to sluggish sales in North America and China, Nissan’s consolidated operating profit in the April-September first half of fiscal 2024 dived about 90 pct from a year before.
Asked about the planned strengthening of relations with Nissan, a source related to Honda showed mixed feelings, saying, “It’s difficult to say if we are concerned or not.”
The business integration talks could stall unless Nissan shows a path toward earnings recovery early, pundits say.
Hybrid vehicles, with high fuel efficiency, are enjoying robust sales in the United States amid surging fuel prices. But Nissan has been unable to supply popular hybrid vehicle models to the US market.
“We were unable to predict that demand for hybrid vehicles would grow so rapidly,” Nissan’s Uchida said at a press conference last month, admitting that the company was slow to take necessary measures.
It will take more than a year for Nissan to develop a new hybrid vehicle model on its own, he said.
Meanwhile, Honda has set a target of doubling its annual global hybrid vehicle sales by 2030 from the 2023 level of 650,000 units, leveraging a next-generation hybrid drive system it plans to launch in 2026 or later.
On the Tokyo Stock Exchange’s top-tier Prime section on Wednesday, Nissan’s stock jumped 23.7 pct from the previous day following media reports that the company has started talks with Honda on their possible business integration. In contrast, Honda stock slid 3.0 percent.
The stock price developments apparently reflected investors’ view that the business integration negotiations were intended for Honda to rescue Nissan.
On the integration negotiations, Honda Executive Vice President Shinji Aoyama told reporters Wednesday, “We are talking (about the matter) on the assumption that Nissan’s earnings will pick up.”
Honda is expected to call on Nissan to steadily implement its recently announced restructuring measures, such as shedding 9,000 jobs.