Japanese car makers Honda (HMC) and Nissan changed course today and will now give up an update on potential merger plans next month.
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The two manufacturing giants had been expected to update the market on the “direction of the management integration” by the end of January, but it is understood that they are still ironing out parts of the deal. According to people close to the companies Honda is urging its Japanese peer to be bolder in its restructuring plans, particularly around early retirement programs for workers at its U.S. plants. It is also looking to reduce its workforce in Thailand.
Merger to Combat Chinese EV Threat
The carmakers are exploring a potential merger mainly to combat what they see as the threat from Chinese electric vehicle makers and to accelerate technological development. The deal would lead to the creation of the world’s third biggest car maker behind Volkswagen (VWAPY) and leader Toyota.
Back in December, Honda and Nissan said they aimed to complete their talks around June this year before setting up a holding company by August 2026. It would be listed on the Tokyo Stock Exchange.
French Support from Renault
The new holding company, would it is understood, operate both Honda and Nissan and potentially a third Japanese car group Mitsubishi Motors. Nissan’s long-term alliance partner, French carmaker Renault, is believed to be open in principle to the merger. It owns 36% of Nissan, including 18.7% through a French trust. Although it is believed it is pushing Nissan to negotiate a higher premium from Honda in the deal.
Is HMC a Good Stock to Buy?
On TipRanks, HMC has a Moderate Buy consensus based on 1 Buy rating. Its shares have fallen by around 15% over the last 12 months.
