The Honda-Nissan merger has been in the headlines for quite some time now. Yet, every month, there’s a new hurdle or setback for either Honda or Nissan. What is it this time? Is Mitsubishi also facing a financial crisis like Nissan did?
Since you follow the Arabwheels blog to stay up-to-date with the latest automotive news, we’ll explain it to you. Read till the end to thoroughly understand the current situation of the Honda-Nissan merger and why Mitsubishi decreased its net profit estimate by a significant 76 %.
Honda-Nissan Merger
As we all know, Nissan has been in a tight spot for quite some time. Honda stepped in with a merger proposition, and both parties agreed. With this partnership, Honda could excel in the EV field with Nissan’s help. Similarly, Nissan would benefit from Honda’s financial support.
However, Honda now wants a controlling stake in Nissan. Honda reportedly feels concerned about Nissan’s recovery efforts and wants to take on a larger role in the company. All these setbacks are making Nissan’s future uncertain, and Nissan is facing job cuts and potential tariff problems.
While we sympathize with Nissan, we still understand Honda’s decision. No one bets on the losing horse unless they want that very horse to win. Honda wants to see promising progress from Nissan before jumping into a merger.
On January 31, 2025, Honda and Nissan confirmed that the official merger had been postponed from late January to mid-February. The delay was caused by internal disagreements and Nissan’s inability to prove its financial stability.
Not a Rescue for Nissan
Honda’s CEO, Toshihiro Mibe, said, “This is not a rescue of Nissan.” He emphasized that if Nissan wants Honda to commit, it should improve its financial performance. Nissan has already started making efforts to honor its end.
Nissan has just announced plans to cut 9,000 jobs worldwide and lower production at its assembly plants in the U.S. In April, Nissan will be adjusting its production at Smyrna, Tennessee, and Canton, Mississippi, where they create the Rogue and Altima.
This change will lead to a 12% reduction in U.S. production, which translates to around 63,000 vehicles each year. Nissan also faces some challenges with potential tariffs from President Trump’s trade policies. The company’s models in Mexico, like the Sentra, Versa, and Kicks, may see a 25% tariff significantly raise their prices. This will have a negative impact on their sales in the U.S.
Mitsubishi in Crisis?
Mitsubishi, which was indirectly involved in the Honda-Nissan merger, is also facing financial trouble. In its recent Q3 financial results presentation, it showed a massive decrease in its annual net profit forecast—almost 76% less than its recent prediction of 144 billion yen issued in May 2024.
According to Nikkei Asia, dry wholesale sales, marketing expenses in North America, and inflation are the primary causes of this financial instability. Mitsubishi has adjusted its sales targets for the year from 895,000 to 848,000 units.
However, this still represents an improvement over the 815,000 units sold last year! The majority of this decrease is in Mitsubishi’s largest markets, Thailand and Indonesia, where the company is facing some challenges.
CEO Takao Kato said on an earnings call Monday, “Thailand used to demand one million vehicles annually; however, this demand has not recovered significantly after the COVID-19 pandemic. Due to the high level of household debt, it decreased even more rapidly in the financial years 2023 and 2024.”
Thats not All
There have been some whispers about Mitsubishi possibly withdrawing from the Honda-Nissan merger. Kato assures us that it’s unlikely that Mitsubishi “will not be involved at all.” The company is keen to see how the merger unfolds before deciding exactly when and how to intervene.
“Our strengths lie in plug-in hybrids, our strong presence in the Asia-Pacific market, and a fantastic lineup focused on pickup trucks,” he shared. “We’re excited to explore how these advantages can be leveraged and what kind of support we can anticipate in the North American market and in the realm of developing auto intelligence—areas where we’re looking to grow and strengthen our position.”
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