Japanese automakers Honda and Nissan have signed a memorandum of understanding for the merger. The first phase of negotiations took place between the companies on Monday December 23. The companies gave this information in the official press release.
This Honda-Nissan merger could be finalized by June next year. Through this agreement, the companies will form a holding company in which both will have an equal stake. The new holding company will be listed on the Tokyo Stock Exchange (TSE) by August 2026. Apart from this, both will also work to strengthen their respective brands.
Main reason for the decline of the Sino-American share
Due to falling sales and profits in the Chinese and American markets, companies have had to reduce their workforce and production capacities. We have also seen for some time a drop of around 70% in company profitability. Declining market shares in the two major markets could be a reason for the companies to come together.
After the merger, two major companies will be created in Japan.
With this agreement, two major companies will work in the Japanese automobile industry: first: a holding company controlled by Honda, Nissan and Mitsubishi and second: a group composed of Toyota group companies.
Nissan has currently reduced its ties with France’s Renault SA. While Honda withdrew from General Motor Company. Before this deal was discussed between Honda and Nissan, the two companies agreed to work together on electric vehicle batteries and software earlier this year.
Honda shares rose 4%, Nissan shares also rose 1.58%
Today i.e. December 23, Honda Motor stock increased by 3.82%. The company’s shares closed at 1,276 yen, up 47 yen (Japanese currency). Honda’s market capitalization is Rs 6.74 lakh crore. At the same time, Nissan shares also rose 1.58%. It rose 7 yen and closed at 450 yen. The market capitalization of the company is Rs 1.67 lakh crore.