Honda, Nissan and Mitsubishi agree to cooperate in a new automotive alliance

Japanese automakers are finalizing a new strategy for the modern automotive era. Three manufacturers will unite their strengths to complete a separate alliance. Honda Motor and Nissan Motor reached a preliminary agreement this week, which was first introduced in March, and further details have been provided on how they plan to work together and include Mitsubishi Motors in the union. Honda's CEO Toshihiro Mibe stated that while the companies have not yet discussed a capital alliance, forming one is possible.

The three companies stated that the partnership will include joint work in software development, batteries, and other electric vehicle components, as well as electric vehicle charging services. This collaboration comes after Toyota acquired stakes in Subaru, Suzuki Motor Corp, and Mazda Motor Corp, assisting it in a risky era for traditional automakers.

While Toyota has positioned itself strongly in the global market, being the best-selling company in the world for four consecutive years, Honda, Nissan, and Mitsubishi are much smaller players in the global arena. Their meeting is seen as a move by the Japanese government to bolster the automotive industry in light of China's emergence as the world's number one car producer.

James Hong, an analyst at Macquarie Securities Korea, stated, “This is being coordinated by the government to provide a competitive automotive industry.” He added that most Japanese automakers are too small to invest in electric vehicles individually. He concluded, “It seems like a politically driven alliance.”

The United States has the three major automakers General Motors, Ford Motor, and Chrysler, now owned by Stellantis; Germany also has a huge trio of Volkswagen Group, BMW AG, and Mercedes-Benz. In contrast, Japan has a much larger group of automakers producing vehicles worldwide.

Together, Honda, Nissan, and Mitsubishi sold about 4 million cars globally in the first half of the year, significantly less than the 5.2 million vehicles sold by Toyota alone. While the three companies praised the potential for collaboration, executives also acknowledged that they would need to overcome discrepancies between the three firms.

Nissan CEO Makoto Uchida stated at a press conference with Mibe, “Despite our cultural differences, we share the same challenges.” Nissan, Honda, and Mitsubishi have lagged in moving toward modern automotive technologies, electric, and hybrid vehicles. Last month, the Japanese government set a target for its automakers to capture 30% of the modern vehicle market by 2030.

In addition to collaborating in software areas including autonomous driving, connectivity, and artificial intelligence, car manufacturers may share battery specifications and production components. Honda and Nissan are also looking to reintroduce versions of each company’s vehicles under each other's names. The two companies did not provide specific details on particular models or clarify how they could complement each other by region.

Honda announced plans to invest 10 trillion yen in electric vehicles this decade, while Nissan brings to the table the experience gained from launching the first fully electric vehicle in the modern era, the Leaf, in 2010. Mitsubishi Motors excels in plug-in hybrid vehicles and has a strong presence in Southeast Asia.

China is also a key factor behind the partnership of Honda, Nissan, and Mitsubishi Motors, as all Japanese automakers have lost market share in China, largely due to the growing popularity of electric vehicles. In June, Honda and Nissan's sales fell by about 40% and 27%, respectively, in China after shutting down some of their local factories. Last week, Honda decided to cut gasoline vehicle production there by 19%. Mitsubishi Motors exited the market last year.

Tatsu Yoshida, a senior automotive analyst at Bloomberg Intelligence, stated, “Honda and Nissan have been struggling in China, and they will need to produce more electric vehicles to survive there,” thus making the alliance “logical.”

For Nissan, the deal with Honda indicates a further diminishment of the company's alliance with Renault. While the French manufacturer saved Nissan over two decades ago, they are now in the process of rationalizing their mutual stakes and dismantling aspects of their decades-long cooperation.