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Japanese Automakers Soar as Mergers and Acquisitions Become a Reality in Face of Electric Vehicle Competition
Tokyo, Japan – Shares of Japanese automakers Nissan and Mitsubishi rose sharply on Wednesday after reports surfaced that the two companies are considering a potential merger. According to media reports, Honda is also considering joining the deal, potentially creating a three-way merger to combat the growing competition from Chinese electric vehicle (EV) makers and incrementally from Tesla.
Nissan Motor Co. saw its shares rally as much as 20% in Tokyo trade, while Mitsubishi Motors Corp. surged as high as 47.4 yen. Honda Motor Co. Ltd. lagged behind, falling about 2% to 1,240.0 yen.
In a separate development, Toyota Motor Co. rose 1.8%, despite being considered as a possible subject of heightened competition in the event of a merger. Japan’s benchmark Nikkei 225 index fell 0.7%.
The reports suggest that Honda and Nissan will set up a holding company before setting merger terms and may potentially include Mitsubishi in the deal. The two companies have already increased cooperation in recent years, pooling their resources as they face intensified competition from Chinese EV makers, as well as Tesla.
Dwindling sales in China have been a significant point of contention, given that the country is the world’s largest automobile market. The Japanese automakers are also grappling with sluggish demand in the U.S. and Europe, both key automobile markets.
Both Honda and Nissan, Japan’s second and third-largest automakers, respectively, issued identical statements that no merger agreement has been announced, according to Reuters.
