Foreign media believes that competition with Chinese enterprises is one of the reasons for Honda and Nissan to negotiate a merger

According to a report by Kyodo News on December 23rd, Honda and Nissan announced the full launch of business merger negotiations

Honda and Nissan announced that they will establish a new holding company to include both car companies in their business merger. Honda and Nissan have announced plans to achieve a business merger by August 2026

According to a report by Kyodo News on December 23 in Tokyo, the background reason for Honda and Nissan's decision to negotiate a business merger is that the competitive field is shifting towards electric vehicles (EVs) and in car software, and Japanese car manufacturers' once proud technological advantages such as engines are rapidly weakening

Compared to the engine, the structure of the motor used as the power source for EVs is simpler. The threshold for entering the EV market has been significantly lowered, and companies such as Tesla in the United States and BYD in China have joined to expand their market share, becoming a threat to Japanese car manufacturers

In car software provides support for enhancing the attractiveness of cars through autonomous driving and entertainment functions, becoming the core of competition, which is also beneficial for emerging car manufacturers. Chinese smartphone giant Xiaomi Technology and strong IT companies from other industries have also participated extensively, intensifying the sense of crisis among Japanese car manufacturers

An article on Bloomberg News website on December 23rd stated that the severe situation in China is one of the reasons for the merger of Honda and Nissan

The increasing popularity of electric vehicles produced by BYD and other companies has caused Japanese car manufacturers, which provide high-quality cars, to lose the status they once enjoyed. This has also led to overcapacity in its factories in China, which were built to meet the demand of the Chinese automotive market

James Hong, an analyst at Macquarie Securities Korea, said, "Look at Honda and Nissan, they have been losing market share for some time now. We expect both companies to plan to significantly reduce production capacity." Yuwen Yoshida, an analyst at Citigroup Global Financial Holdings, said that Nissan has launched a reduction plan to cut global production capacity by one-fifth

In July of this year, Honda announced that it would close factories in China and reduce certain production capacity. The company's executive vice president, Shinji Aoyama, said last month that the company is in talks with Chinese partners to further reduce production

Not only Japanese car manufacturers feel challenged in China, but also General Motors of the United States, Volkswagen of Germany, BMW, Mercedes Benz, and others