Both are trying to keep up in the new world of electric vehicles
Transcript:
Conway Gittens: The Dow is on track to snap its longest losing streak since 1978 despite somber news on the housing front. New home construction projects dropped for a second month in a row, falling to a four-month low in November.
In other news, Japanese automakers Honda and Nissan are in talks for a possible merger. The tie-up is largely seen as an attempt to muscle up against a changing of the guard with Tesla and Chinese automakers gobbling up more global market share.
Honda and Nissan already have a strategic partnership, but a merger would help them reduce operational costs, share technology, speed-up new car development, and most importantly – help them battle in an EV price war set-off by Tesla and Chinese automakers like BYD.
This will be a complicated deal with many stakeholders having their say. French car maker Renault is Nissan’s biggest shareholder and Nissan is the biggest shareholder of Mitsubishi Motors. Contract manufacturer Foxconn also wants to be in the mix. And there is something else that could complicate any possible merger – Donald Trump’s proposed tariffs. Both Honda and Nissan build cars in Mexico to be sold in the U.S. Trump might try to use the merger to get concessions for his America first agenda.
If the talks produce an actual merger, it would create the world’s third largest auto company behind Toyota and Volkswagen. The combined entity would be worth $54 billion, with annual auto production of 7.4 million vehicles.
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