Close-up view of king chess pieces on wooden blocks with joins and purchases
The mooted Honda/Nissan merger and the fallout from the change in leadership at Stellantis suggest that the auto industry must prepare for a period of upheaval, where size is seen as a necessity for survival.
This will add to European investors’ concerns for 2025 as they prepare for economic weakness and political turmoil, a possible tariff war initiated by President Trump, China’s expansion, autonomous vehicles, the uncertain future for electric vehicles and a growing controversy over Europe. The Union’s CO2 regime.
Some analysts expect a mega-merger between healthy Honda and troubled Nissan plus Mitsubishi to trigger more takeover action from competitors. Others don’t, but investment bank Morgan Stanley has no doubts.
“Powerful industry forces are pushing (traditional manufacturers) to maintain scale, share costs and optimize return on capital invested in growth as powerful rivals and disruptive technologies gain momentum. Consolidation can be more than a trend – it’s a strategy,” Morgan Stanley said in a report.
Meanwhile, any changes to Stellantis will have to consider whether it really needs 14 brands.
“Stellantis’ difficulties are both company-specific and the latest iteration of the auto conglomerate’s tough global business mode. We believe the next CEO will be tasked with not only fixing earnings but also ‘rethinking’ his strategy, with a mandate that could range from breaking up to more alliances in manufacturing or technology,” the researcher said in a report. Jefferies Investments.
(L to R) Makoto Uchida, President and CEO of Nissan Motor Corporation, Toshihiro Mibe, President and … [+]
Stellantis CEO Carlos Tavares resigned in December. Tavares orchestrated the major merger between Fiat Chrysler and France’s Groupe PSA in 2021. Many of the brands compete in the same market, including Citroen, Peugeot, Vauxhall and Opel in the mass market, Lancia, DS and Alfa Romeo in the quirky premium sector , and Dodge, Ram, Jeep and Chrysler in the US
Other analysts point to the lack of success during the years of mega-mergers such as Daimler-Chrysler and BMW-Rover, which were later dissolved. Stellantis’ problems have led to a suggestion that he join France’s Renault.
US-based Auto Forecast Solutions doesn’t expect to see any merger mania.
“As in the past, the current discussions between Honda and Nissan will not lead to a wave of major automakers joining the mega-players. Large transactions like these are rare and have never led to other giant consolidations,” says the latest AFS report.
“Acquisitions of smaller automakers happen all the time and are likely to continue as the remaining players secure their place among the global order,” AFS said.
Last month, Honda and Nissan said they would explore a merger as both try to meet the global shift to electric vehicles. This would create a company with annual sales of nearly 7.5 million vehicles making it the 3rd largest in the worldst the largest vehicle manufacturer after Toyota and 2n.d Volkswagen country. Taiwan’s Foxconn was also said to be interested in buying a controlling stake in Nissan. Renault and Nissan have large stakes in each other.
French automotive consultancy Inovev said in a report that this appeared to be a move to save ailing Nissan from healthy Honda. Inovev said the two companies’ vehicle ranges and markets overlap.
“Both car manufacturers are losing ground in the Chinese market, as well as in the European market. It is therefore time to join forces to negotiate the transition to electric power, an area in which both are almost absent and which is dominated today by Tesla and BYD,” Inovev said.
iSeeCars Executive Analyst Karl Brauer said the proposed merger reflects the global industry’s drive to meet existential challenges. He admits that Nissan is weaker due to mounting debt and weak sales, while Honda needs more scale to challenge massive competitors such as Toyota, Volkswagen and General Motors.
“Rising production costs, the development of electric vehicles and China’s ever-increasing share of the global automotive market are universal challenges,” Brauer said.
Grand mergers are difficult to implement and failure would be dangerous.
Stellantis Chairman John Elkann, right, and Stellantis CEO Carlos Tavares attend Paris Auto … [+]
“While automotive fusions always look great on paper, making them work in practice is never easy. Effective leadership is essential in the process of identifying each brand’s strengths and consolidating vehicle platforms and drive systems while developing a future product plan that fully utilizes the new partnership. It will be years before we know if this was successful, and if the merger fails, it will likely leave both brands weaker than before they started,” Brauer said in a statement.
Steve Young, managing director of UK-based automotive retail consultancy ICDP said that in the past a wide range of factors drove mergers, the current wave is centered on China.
“The current wave of discussions seems to be constantly driven by the scale of product development challenges, both in terms of cost and timeline. Manufacturers can see the speed with which their Chinese rivals have gained market share in China and fear the same will happen in other markets — despite some consumer resistance to buying from new brands, Young said in the blog. his weekly.
“I do not doubt the technical ability of the established (manufacturers) to compete in engineering, but I fear that the pace will be very slow, influenced by traditional thinking that is based around 4-year development processes and 8- year. “, Young said.
Morgan Stanley said multiple factors disrupting the industry make more mergers a necessity.
“Older auto companies that don’t find new partners have to face the prospect of being smaller companies with higher capital/R&D per unit. We are entering a new phase of the automotive industry where strategies for scale and cost leadership put the focus on collaboration and potential changes in scope,” said Morgan Stanley.
