Honda Motor Co and Nissan’s merger talks are likely going to break down. The possible failure of the merger discussions spells trouble for both the auto makers, however, reports suggested that this could end being up more problematic for Nissan.
Both the auto firms are expected to release their quarterly results this week, reported Bloomberg. Nissan has been facing issues for years now for constant changes in the leadership and a product lineup which has become outdated with the global shift to electric vehicles and cheaper Chinese competitors with faster cars such as BYD Co.
Weak Q3 Expectations
The merger would have created the third-largest carmaker in the world. On their own, the report noted that Honda ranks eighth globally in the industry, while Nissan stands at the ninth place. Now, both companies face the danger of being overtaken by the Chinese auto player, Geely Automobile Holdings Ltd, which has brands such as Volvo, Lotus, and Zeekr.
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In the third-quarter earnings, Honda is expected to report an operating income of ¥407 billion ($2.7 billion), estimated compiled by Bloomberg stated. For the October-December quarter, Nissan is predicted to clock an income of ¥51.5 billion, the estimates showed.
The report said that for the fiscal year ending March 31, 2025, Honda’s operating income is anticipated to reach ¥1.45 trillion, while Nissan is expected to report the income of ¥130 billion.
Julie Boote, an automotive analyst at Pelham Smithers Associates, said that the worries remain that Nissan will be too optimistic. “While gas-electric hybrids have caught a second wind in the US and EVs are running ahead in China, Nissan has fallen behind on both fronts,” the report said citing the expert.
Boote questioned where the sales growth is going to come for Nissan and cautioned that they might be too optimistic because ‘they have to prove that they can generate enough income to increase profits after the restructuring’.
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