On December 25, a development employee at Dongfeng Nissan expressed concerns about potential changes in their work due to ongoing automotive projects, including plug-in hybrids, later stating, "I am afraid that there will be changes next year." This feeling of uncertainty comes amidst the backdrop of a formal memorandum of understanding (MOU) signed on December 23 between Nissan Motor Corporation, Honda Motor Co., and Mitsubishi Motors Corporation, signaling an exploration of business integration and possibly establishing a joint holding company.

This strategic move raises questions: what implications does it hold for Nissan and Honda's operations within the Chinese automotive market, a vital sector for all global car manufacturers?

Comments gathered from various employees at Dongfeng Nissan, GAC Honda, and Dongfeng Honda reveal a lack of surprise regarding the announcement

One marketing staff member from Dongfeng Nissan remarked, "I believe that among joint venture brands in China, whether they belong to Dongfeng or GAC, there wouldn't be much discussion or concern about this matter." Another mid-level manager with over a decade of experience at Dongfeng Honda noted that the recent developments merely involve shareholder restructuring and that these brands would continue to operate independentlyHe emphasized that the original agreements between Nissan, Honda, and their Chinese partners had already solidified their cooperative relationships, suggesting that significant changes in joint brand operations are unlikely throughout the existing agreement periods.

This perspective aligns with wider industry trendsFor instance, when Toyota acquired stakes in several firms, including Subaru and Daihatsu, each brand continued to pursue its unique growth trajectory without overlapping operations in manufacturing or supply chains.

Automotive industry analyst Zhong Shi weighed in, stating, "Consolidation among car manufacturers is common, aimed at reducing costs and sharing supply chains

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Such mergers typically have little bearing on domestic branding within ChinaBased on historical precedents, similar mergers rarely disrupt existing brands." This sentiment is illustrated by the formation of the Hyundai Kia Automotive Group in 2000, which subsequently developed various joint ventures like Beijing Hyundai and Yueda Kia, all maintaining their brand identities.

Nissan and Honda's arrangements in the Chinese market encompass several joint ventures: Dongfeng Honda, GAC Honda, Dongfeng Nissan, Zhengzhou Nissan, and Dongfeng Commercial VehicleNissan primarily collaborates with Dongfeng, while Honda's partnerships intersect with both Dongfeng and GAC.

Analyzing the public data reveals that the joint venture agreements between Dongfeng and both Honda and GAC have a 30-year span, set to expire in 2033 and 2028, respectivelyConversely, the partnership between Dongfeng and Nissan, established in 2003, has a far longer tenure of 50 years

Such long-term agreements reflect a significant commitment from all parties involved.

Viewpoints from industry leaders like Cui Dongshu, secretary-general of the Passenger Car Association, reinforce the notion that the recent merger proposal lacks substantial immediate influence on the Chinese marketHe noted, "This partnership primarily involves capital collaboration that won’t drastically affect operations for domestic partners."

According to information from Nissan China and Honda China, should the companies successfully integrate their operations, they could evolve into a mobility conglomerate boasting annual revenues exceeding 30 trillion yen (approximately 1.4 trillion RMB) and operating profits surpassing 3 trillion yen (around 139.9 billion RMB).

The timeline for their merger details a plan to finalize their cooperative strategies by June 2025, with a series of procedural steps leading up to the intended share transfer formalities slated for August 2026.

Amidst this ongoing evolution, one industry consultant speculated that Nissan and Honda’s primary purpose in integrating operations pertains to seeking public financing to attract external investment

He explained, "The critical focus for both companies currently lies in the North American and Japanese markets, with the Chinese market not being their top priority for the moment."

Indeed, recent sales figures indicate that North America represents a fundamental market for both automakersIn the first half of the year, Nissan achieved sales of 489,000 units in North America, while Honda reached 690,000 units.

Zhang Hong, an expert from the China Automobile Circulation Association, echoed this, suggesting that the core competency for both companies lies in internal combustion vehicles, leading to eventual market integration in North America first—perhaps through collaborative development or combined supply chains—while maintaining distinct operations within China for now.

Looking ahead, experts predict that potential shifts might occur in the joint ventures in about three years

Though no immediate actions are underway in China, this doesn’t mean that future collaboration is off the tableZhang reiterated that the competitive landscape in the Chinese automotive industry, particularly with the rise of electric vehicles, pressures manufacturers like Nissan and Honda to consider resource consolidation, especially concerning research and development and supply chains.

Sales data from Nissan and Honda China reveal a challenging environment: Nissan recorded a ten percent decline in sales in China, totaling 621,700 units, while Honda suffered a more significant downturn of 30.7%, selling just over 740,400 units in the published period.

Zhang posits that one area ripe for collaboration lies in solid-state battery technology, where both companies have made substantial progressFor instance, Nissan unveiled an experimental solid-state battery production line in June 2023, targeting 2026 for road testing prototypes and market introduction by 2028. Honda similarly showcased its own solid-state battery production line in November 2023, emphasizing plans for early 2025 trial production for all-electric vehicles.

In March, both companies also acknowledged a budding partnership focused on electric vehicle production and software strategies, aiming to finetune their competitive edge against established players like Tesla and BYD