(Bloomberg) – Honda Motor Co. (HMC) absorbs Nissan Motor Co (NSANY). could give the two struggling Japanese brands the scale they need to take on China’s BYD Co., according to sales figures released Wednesday.
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Honda, which earlier this week outlined plans for a deal amounting to a takeover of Nissan, sold 3.43 million cars worldwide in the first eleven months of 2024. Nissan said it sold just over 3 million cars.
China’s largest automaker BYD sold 3.76 million vehicles in the same period – a clear illustration of how Nissan and Honda are weak alone, but together they can have a fighting chance.
Honda and Nissan are both struggling to compete against rising domestic automakers in China, which surpassed Japan as the world’s largest auto exporter last year and is set to advance even further in 2025.
The duo has had to cut workforces and production in China, while Mitsubishi Motors Corp., which may also join the Honda-Nissan combination, has all but withdrawn from the world’s largest auto market.
Honda’s sales in China fell 28% in November from the same month in 2023, while production fell 38% year-on-year.
Any spending Honda may have to make to catch up could be affected by the ¥1.1 trillion ($7 billion) buyback, S&P Global Inc. said. in a report. “Large-scale share buybacks do not contribute to strengthening the future business foundation and result in capital outflows,” the rating agency said.
Honda announced the buyback on Monday. The upper limit is 24% of the issued shares. Shares in Honda closed 0.8% higher on Wednesday.
Nissan’s sales in China fell 15.1% in November, while local production fell 26%.
Globally, Honda sales fell 6.7% to 324,504 units last month, while production fell 20.4%. Nissan’s global sales fell 1.3% year-on-year to 278,763 vehicles in November, while production took a bigger hit at 14.3%.
Together, Honda and Nissan would also pose a bigger threat to Toyota Motor Corp., the world’s largest automaker, followed by Germany’s Volkswagen AG. Global sales stabilized in November as subdued demand coincided with a production pause at two of its factories.
Toyota sales – including those of subsidiaries Daihatsu Motor Co. and Hino Motors Ltd. – totaled 984,348 units last month, the Japanese automaker said Wednesday, down 0.2% from November 2023. Production fell 9.4% year-on-year to 966,921 units.
Toyota’s business is also feeling the strain from locally produced electric vehicles in China and intense competition over hybrid gasoline-electric cars in the US. Like Honda and Nissan, its hold on Southeast Asian markets is also being steadily eroded by Chinese competitors.
