Honda and Nissan’s potential merger could provide the struggling Japanese automakers with the scale needed to better compete with China’s BYD, the world’s largest electric vehicle maker.
Both Honda and Nissan have faced declining sales and production in recent years, particularly in China, where BYD’s dominance in the electric vehicle market continues to grow.
For the first 11 months of 2024, Honda sold 3.43 million vehicles globally, while Nissan’s sales slightly exceeded 3 million. In comparison, BYD led with 3.76 million vehicles sold over the same period, highlighting the competitive pressures facing both Japanese automakers. The merger, which Honda has outlined as an acquisition of Nissan, could allow the combined company to pool resources and potentially challenge BYD’s growth trajectory.
Both Honda and Nissan have struggled in China, where local automakers, including BYD, are rapidly expanding their market share. Honda’s sales in China fell 28% in November 2024 compared to the same month the previous year, while production dropped 38%. Nissan faced similar setbacks, with sales in China falling 15.1% and local production sinking 26%.
Globally, both companies are grappling with weaker demand for new cars. Honda’s worldwide sales slipped 6.7% in November, while Nissan’s global sales dropped 1.3%. Production for both brands also saw significant declines in November, with Honda’s output down by 20.4% and Nissan’s falling by 14.3%.
The merger could also pose a new competitive challenge to Toyota, the world’s largest automaker, which itself is facing growing competition from Chinese manufacturers. Toyota has seen a slowdown in its global sales, particularly in China and Southeast Asia, where Chinese automakers are gaining ground. While Toyota’s sales and production were slightly down in November 2024, its efforts to boost its return-on-equity targets to 20% have given investors some optimism.
