Honda Motor Co absorbing Nissan Motor Co could give the two struggling Japanese brands the scale they need to take on China’s BYD Co (比亞迪), sales figures released yesterday showed.
Honda, which earlier this week sketched out plans for a deal that amounts to an acquisition of Nissan, sold 3.43 million cars globally in the first 11 months of this year. Nissan said it sold just over 3 million.
China’s biggest automaker BYD sold 3.76 million vehicles over the same period — a clear illustration of how Nissan and Honda are weak alone, but together might have a fighting chance.
Honda and Nissan are having trouble contending with ascendant domestic automakers in China, which surpassed Japan as the world’s largest car exporter last year and is set to pull further ahead next year.
The duo have had to pare back staffing and production in China, while Mitsubishi Motors Corp, which might also participate in the Honda-Nissan combination, has all but pulled out of the world’s biggest car market.
Honda’s sales in China fell 28 percent last month compared with the same month of last year, while output slumped 38 percent year-on-year.
Any spending Honda might need to do to catch up could be impacted by its ￥1.1 trillion (US$7 billion) buyback, S&P Global Inc said in a report.
“Large-scale share repurchases do not contribute to strengthening the future business base and result in capital outflows,” the ratings agency added.
Honda announced the buyback on Monday. The upper limit amounts to 24 percent of issued shares. Stock in Honda closed up 0.8 percent yesterday.
Nissan’s China sales dropped 15.1 percent last month, while local production sank 26 percent.
Globally, Honda’s sales last month slipped 6.7 percent to 324,504 units, while output tumbled 20.4 percent. Nissan’s worldwide sales declined 1.3 percent year-on-year last month to 278,763 vehicles, while production took a bigger hit at 14.3 percent.
Together, Honda and Nissan would also pose more of a threat to Toyota Motor Corp, which is the world’s biggest automaker followed by Germany’s Volkswagen AG. Its global sales plateaued last month as lackluster demand coalesced with a pause in production at two of its plants.
Toyota’s sales — including that of subsidiaries Daihatsu Motor Co and Hino Motors Ltd — totaled 984,348 units last month, the Japanese automaker said yesterday, down 0.2 percent year-on-year. Production declined 9.4 percent to 966,921 units.
Toyota’s business is also feeling the strain of locally made electric vehicles in China as well as intense competition over hybrid gasoline-electric cars in the US.
Like Honda and Nissan, its hold on markets across Southeast Asia is being steadily eroded by Chinese competitors, too.
More broadly, weaker global demand this year for new cars was compounded by output cuts at Toyota caused by regulatory probes, and recalls in Japan and abroad.
Production in the first 11 months fell 7.3 percent in Japan and 15.2 percent in China for Toyota, again underscoring the rising competition in Asia’s biggest economy.
Toyota’s production in China, or vehicles off the delivery line as opposed to end-consumer sales, declined 1.6 percent last month.
Shares in Toyota gained as much as 4.4 percent yesterday.–BLOOMBERG
