- The merger of the two companies it would increase its manufacturing presence in the US and reduce its exposure to import taxes. It has three factories in the USA; , in turn, has 12 installations. President-elect Trump hopes tariffs will force foreign companies to produce more of their cars in the U.S.: “I want the car companies [estrangeiras] become American companies. I want them to build their factories here,” Trump in September.
Japanese auto giants Nissan and Honda are exploring talks to build a closer relationship that could include a merger, according to reports. Combined, Japan’s second and third largest automakers would approach in size , which would remain .
A potential merger also hints at changes in the automotive landscape. Automakers are grappling with the transition to electric vehicles and the possibility that global trade could be upended if President-elect Trump imposes the across-the-board tariffs he promised during the campaign.
For car companies that manufacture products outside the US, the possibility of having to pay a tax on imports could have a significant impact on their business. The merger of Honda and Nissan would increase their combined manufacturing presence in the U.S., which would reduce their potential exposure to imports of vehicles made in Japan or Mexico. Nissan has three manufacturing plants in the U.S., in Smyrna and Decherd, Tennessee, and in Canton, Mississippi. Honda, in turn, has 12 facilities in the USA.
Continues after advertising
Through October of this year, Nissan manufactured 460,338 vehicles in the U.S., a 10.6% drop compared with the same period last year, according to sales data. Honda has enough capacity to produce 1 million cars a year in the U.S., according to a June press release.
Talks about a possible merger first appeared on Nikkei. A Honda spokesperson told Fortune that the reports did not come from individuals within the company. Nissan did not respond to a request for comment.
In March, Honda and Nissan announced they would collaborate on developing software and certain car components for electric vehicles. “Honda and Nissan are exploring various possibilities for future collaboration, building on each other’s strengths. We will inform our stakeholders of any updates at an appropriate time,” said the Honda spokesperson.
Continues after advertising
Throughout his presidential campaign and now during the transition process, Trump has repeated his proposal to impose 20% tariffs on all goods imported into the US. These tariffs would apply to any Honda or Nissan vehicle manufactured abroad and then shipped for sale in the US. The stated purpose of the tariffs is to induce companies to increase their American manufacturing. Although the extent to which companies will do this—as opposed to simply paying the tariffs and passing the prices on to consumers—remains to be seen.
Trump has proposed targeted tariffs on specific countries, including China, Mexico and Canada. Nissan makes more cars in Mexico than in the US. Nissan increased its production in Mexico by 9.8%, totaling 575,366 vehicles through October, according to the same company sales data. Last month, Trump proposed a 25% tariff on all imports from Mexico. Due to its significant manufacturing presence in Mexico, Nissan could be even more drastically affected if Trump follows through with his intention to target tariffs on the country.
Nissan’s ability to navigate what could be devastating tariffs is especially critical to its future, given its struggles in recent years. Last month, the Financial Times reported that the automaker was looking for a long-term lead investor and was considering “all options.” French automaker Renault previously owned a large stake in Nissan, but is reportedly looking to sell its stake.
Continues after advertising
Nissan and Honda’s talks are just the latest move by the auto industry as it prepares for an uncertain future. European automakers are already worried about Trump’s tariffs, which they see as a crucial threat. German companies are already dealing with a stagnant economy and a struggling manufacturing sector. “I want German car companies to become American companies. I want them to build their factories here,” Trump said in September during a campaign event in Savannah, Georgia.
c.2024 Fortune Media IP Limited
Distributed by The New York Times Licensing Group
