Honda, Nissan enter merger pact, look to step up India ops

Japanese automobile players -- Honda Motor and Nissan Motor -- have announced their intent to merge, potentially creating the world’s third-largest automaker by sales after Toyota and Volkswagen Group. In Japan, this merged entity will be the second-largest player and likely to give competition to rival Toyota Motor Corp.

The two companies have signed a memorandum of understanding (MoU) to explore strategic partnership with Mitsubishi Motors expected to join by the end of January 2025. According to insiders, Honda will initially lead the new management, retaining the principles and brands of each company.

This is not the first time Japanese automakers have formed a joint venture. Earlier, Toyota and Suzuki joined hands in 2019 to achieve synergies through product and platform sharing. However, compared to Toyota-Suzuki alliance, which has produced cross-badged models, it is being felt that this collaboration will develop models that are distinct and cater to different segments while sharing a common platform, according to experts.

In India, the top six auto-makers — Maruti Suzuki, Hyundai, Tata Motors, Toyota, Kia and Mahindra & Mahindra — accounted for 92.6 per cent of the domestic sales in FY24. Honda Cars India have tasted some success in India with its City, but struggled because of fewer models. In the last fiscal, Honda saw a sales drop of over 5 per cent in the domestic market and touched a market share of just over 2 per cent. The company sold 86,584 units in FY24 compared to 91,418 units in FY23. Among its models are Amaze, City and Elevate. During April-November this year, the domestic sales plummeted by 28 per cent.

As far Nissan is concerned, which had earlier talked about hitting a market share of 5 per cent in 2020, went in the negative in FY24, with sales plummeting by 10 per cent. Its market share came down to less than 1 per cent. The company sold 30,146 units in FY24 compared to 33,611 units in FY23.

The company's model Magnite, a mini-SUV, achieved some success, but it failed to launch models that have wider acceptance. Both the companies have limited models which is one of the major reasons behind low market share. A collaboration could help both companies to have wider product portfolio and better market share.