(Bloomberg) -- Honda Motor Co. and Nissan Motor Co. agreed to collaborate on software, batteries and other electric vehicle-related technologies to save on costs and better compete in markets such as China, where sales are slumping.
Mitsubishi Motors Corp., which already has ties with Nissan, will join a broader strategic partnership with the duo. Asked whether there were any talks of a capital alliance between Honda and Nissan, Honda President Toshihiro Mibe said: “We have not discussed a capital alliance as yet, but don’t deny the possibility.”
The partnership, aimed at sharing costs through joint development, pits the trio against Toyota Motor Corp., which has built its own consortium via stakes in Subaru Corp., Suzuki Motor Corp. and Mazda Motor Corp. Nissan’s steps to forge a closer relationship with Honda follows its decision in early 2023 to overhaul its alliance with Renault SA, which was dealt a mortal blow by the 2018 arrest of former Chairman Carlos Ghosn.
“Although we have different cultures, we share the same challenges,” Nissan Chief Executive Officer Makoto Uchida said at a news conference with Mibe. “Our key area of collaboration will be software.”
Japanese automakers have been losing share in China due to the popularity of electric vehicles made by BYD Co. and others, which are taking over the premium segment of the market. In June alone, Honda and Nissan sales fell about 40 per cent and 27 per cent, respectively, in China following the shutdown of some of their local plants. Last week, Honda decided to cut production of gasoline cars by 19 per cent there. Mitsubishi Motors exited last year.
“Honda and Nissan have been struggling in China and they will have to make more EVs to be able to stay there,” said Tatsuo Yoshida, senior auto analyst at Bloomberg Intelligence. The alliance, therefore, “makes sense.”
Batteries and electric motors will need large investments, so the carmakers decided to collaborate in these areas to ensure a return on those resources, Uchida said.
Combined, Honda, Nissan and Mitsubishi sold about 4 million units globally in the first six months through June, compared with 5.2 million units by Toyota alone.
The deeper partnership between Honda and Nissan will allow them to leverage each other’s strengths, including deploying various powertrain options. It will also help to defray the huge cost to navigate the broader trend toward automation.
Nissan tied up with Renault in 1999 when the French carmaker came to its rescue. The carmakers held stakes in each other for years and are now in the process of equalizing their cross-shareholdings. Mitsubishi joined the alliance in 2016 when Nissan invested in the smaller carmaker, currently owning about a third of the company.
Nissan, Honda and Mitsubishi have been slow in producing software defined vehicles, as they are known in Japan, or cars based on advanced technologies. The Japanese government has set a target of achieving a 30 per cent market share globally in 2030.
“There is a shift in the mindset of the government and automakers that Japan won’t win if the status-quo continues,” Takeru Ito, a director at the Ministry of Economy, Trade and Industry’s mobility digital transformation office, said in an interview last month.
With assistance from Eru Ishikawa
©2024 Bloomberg L.P.