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Honda Nissan Partnership Could Challenge BYD’s Global Dominance

ByYasmeeta Oon

Dec 31, 2024

Honda Nissan Partnership Could Challenge BYD’s Global Dominance

Honda Motor Co’s proposed acquisition of Nissan Motor Co could provide the scale needed to challenge China’s BYD Co, sales data revealed Wednesday. The move highlights mounting pressure on Japanese automakers to compete in a market increasingly dominated by China’s burgeoning automotive industry.

Honda recorded global sales of 3.43 million vehicles in the first 11 months of 2024, while Nissan reported just over three million. By comparison, BYD, China’s largest automaker, outpaced them both with 3.76 million vehicles sold during the same period. Analysts suggest that a unified Honda-Nissan entity could better contend with BYD’s growing dominance.

Japanese automakers face increasing challenges in China, now the world’s largest car exporter. Honda and Nissan have scaled back staffing and production in the country, while Mitsubishi Motors Corp, another struggling Japanese brand, has almost completely exited the market.

Sales and Production Declines Reflect Struggles in China

Honda’s sales in China plummeted by 28% year-over-year in November, with production slumping by 38%. Nissan fared slightly better but still saw a 15.1% drop in sales and a 26% decrease in local production during the same month. Globally, Honda’s sales declined 6.7% in November to 324,504 units, while Nissan’s slipped 1.3% to 278,763 vehicles. Both automakers also reported steep production cuts.

The proposed merger not only positions Honda and Nissan as a stronger rival to BYD but also as a potential challenger to Toyota Motor Corp, currently the world’s largest automaker. Toyota’s sales plateaued in November, with 984,348 units sold, a slight dip of 0.2% year-on-year, while production fell 9.4%.

Financial and Market Implications

Honda’s recent announcement of a ¥1.1 trillion (US$7 billion) share buy-back could complicate its ability to invest in the merger. S&P Global criticized the buy-back, stating that it diverts resources from strengthening future business operations. Honda’s stock, however, rose 0.8% following the announcement.

Meanwhile, Toyota, which is also grappling with intensifying competition from Chinese automakers, gained investor confidence after a Nikkei report suggested the company aims to double its return-on-equity target to 20%. Shares in Toyota climbed as much as 4.4%, despite no formal confirmation of the target from the automaker.

Rising Competition in Asia and Beyond

Japanese automakers are not only losing ground in China but also seeing their dominance in Southeast Asia eroded by Chinese competitors. Toyota, Honda, and Nissan are all under pressure to defend their market shares as BYD and other Chinese automakers expand globally. The situation underscores a shift in global automotive power dynamics, with Chinese manufacturers leading the charge in electric and hybrid vehicle production.


Featured image courtesy of NPR

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Source: https://digitalmarketreports.com/news/31591/honda-nissan-partnership-could-challenge-byds-global-dominance/

Yasmeeta Oon

Just a girl trying to break into the world of journalism, constantly on the hunt for the next big story to share.

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