Nissan-Honda merger talks could strengthen India play amid competitive market

Japan's Nissan Motor Co. and Honda Motor Co. have begun discussions about a potential merger, Japanese news wire Nikkei reported. If the talks materialize, the merger could benefit significantly their India operations, providing much-needed investment and product portfolio enhancements to strengthen their presence in one of the world’s most competitive automotive markets.

A person aware of the matter said partnership talks leading to a merger have been under way for over a year and a half. "They have synergies, and there will be a lot of exchange of technology. Nissan has small cars, Honda has bigger cars. Nissan has EVs and hybrids, while Honda is strong in strong hybrids," the person said on the condition of anonymity.

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While both Honda and Nissan have issued statements denying any formal decision, the possibility of a merger aligns with their ongoing exploration of collaborating in electrification and software development. In August, Nissan, Honda, and Mitsubishi Motors Corp. signed a memorandum of understanding (MoU) to discuss frameworks for advancing vehicle intelligence and electrification, signaling a strategic alignment of goals.

A struggling Indian market play

In India, Nissan and Honda have struggled to secure a competitive edge, relying on narrow product portfolios to drive volumes. For Honda, the City sedan remains its breadwinner, with limited contribution from other models. Nissan, on the other hand, has been heavily reliant on the Magnite compact SUV for sales.

Honda and Nissan held market shares of xx% and xx% in India in November.

The limited product lineup has made it difficult for both companies to compete with stronger players like Maruti Suzuki, Toyota Kirloskar Motor, Hyundai and Tata Motors, which dominate the Indian passenger vehicle market with a mix of affordable models, SUVs, and electric vehicles (EVs). A potential merger could enable the Japanese automakers to pool resources and introduce a broader, more appealing range of vehicles tailored to Indian consumer preferences.

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"The content of the reports that Honda, Nissan and MMC are considering a business integration is not based on an announcement from our company. As announced in March and August of this year, Nissan, Honda, and MMC are considering various possibilities for future collaboration including the content of the report, but no decisions have been made. If there are any updates, we will inform all stakeholders at the appropriate time. A spokesperson from Nissan said in a statement. Honda Cars India sent a similar statement.

Lagging behind on CAFE norms

The merger could also help the automakers address pressing regulatory challenges in India. Both Nissan and Honda have struggled to comply with the country’s Corporate Average Fuel Economy (CAFE) norms, which mandate stricter emissions standards.

By joining forces, the two companies could accelerate the development and deployment of EVs and hybrid models, not only to meet CAFE requirements, but also to position themselves as forward-looking players in India’s transition to greener mobility.

“Nissan and Honda’s strategic partnership in electrification technologies could be impactful in the Indian context and help them take on the Toyota-Suzuki combine here, where the government is pushing for a rapid adoption of electric and hybrid vehicles," a senior executive at a rival automaker said on the condition of anonymity.

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Globally, Honda and Nissan have been exploring synergies to enhance environmental technologies, electrification, and software development. The merger talks could fast-track these initiatives, potentially offering Indian consumers access to cutting-edge EVs and connected car technologies.

In a statement issued to Mint, Honda Cars India Ltd downplayed the merger speculations.

“Media reports that Honda, Nissan, and Mitsubishi are considering a business integration are not based on an announcement from our company. As announced in March and August of this year, Nissan, Honda, and MMC are considering various possibilities for future collaboration, but no decisions have been made. If there are any updates, we will inform all stakeholders at the appropriate time."