$54 Billion Merger Between Nissan And Honda Is The Largest Deal In Japanese Automobile History

In a move set to complete change the automobile industry landscape, two of Japan’s biggest car manufacturers are going to merge in a deal worth a reported $54 billion.

Honda and Nissan have announced their intention to merge and will operate under one holding company, which is currently without a name. However, Autoblog.com says that Honda will take the leadership role. Beyond this, details are scant as to whether the companies will keep their branding and also the impact on shareholders. These include Renault, which owns around a third of Nissan.

BBC News reported on a news conference in which Honda's chief executive Toshihiro Mibe said that the merger was largely to protect the futures of the companies as they faced "the rise of Chinese power". "The talks started because we believe that we must build up capabilities to fight them, including the current emerging forces, by 2030. Otherwise we will be beaten", said Mr Mibe.

In particular, cheap labour and low manufacturing costs have made the Chinese manufacturers hard to compete with, and they have taken the lead in producing electric vehicles. EU officials have decided to raise tariffs on EVs imported from China to 45% for the next five years, says the BBC, but this could see rising prices for consumers.

While Mibe emphasised that the deal was not a bid to bail out Nissan, which has been struggling with declining sales and has had to make drastic to its workforce.

The deal could also include Mitsubishi, which is allied with Nissan and this would take the merger value to $58 billion.