Nissan-Honda merger could come with headwinds in Indian market

Honda Motor and Nissan’s merger could give the struggling automakers a much required fillip in the Indian market. However, it will also have its potential challenges, automotive industry experts told DH. 

Honda and Nissan-Renault’s combined share in India’s passenger car market would be around 3.5%. The companies will have to work on product innovation, which hasn’t been a hit lately, along with a focus on electric vehicles (EVs), where they are a little late to the party, experts said. 

“The company was an early leader in the EV segment when it launched the Nissan LEAF about 15 years ago and then dropped the ball but Honda never was into it. Therefore, it is difficult to understand how they would overcome those problems,” said Subhabrata Sengupta, Partner, Avalon Consulting.

Japanese automakers Honda and Nissan announced full scale talks of a merger on Monday, aiming to finalise a deal by June 2025. Mitsubishi Motors, which has completely exited India, is also likely to join the alliance.

With fierce competition being a major headwind, the new company, which would be the world’s third largest automaker, will have to win over more Indian customers, who currently prefer the likes of Maruti Suzuki, Hyundai, Tata Motors, and Mahindra over these marquees.

As of November 2024, Honda's market share in India dropped to 1.40% from around 2% in FY24. Nissan’s performance has also been underwhelming and has dipped to 0.7% in FY24 from 1.2% in FY22. Renault’s market share is only slightly better, at 1% in FY24.

Nissan’s alliance with French carmaker Renault is also a key question that the companies need to find an answer to. Both of them share a manufacturing plant in Chennai. Japanese automaker Mitsubishi is also a part of this alliance, even though it does not manufacture and sell cars in India and is in talks with Honda and Nissan for this merger, which makes this deal even more complicated. 

“They need to sort out the approach with respect to this partnership because so far, they've been using the common facility. So, going forward, will Honda and Nissan want to come up with their own product strategy and to what extent will be Renault's involvement in this or will they use the same facility,” said Jayapradeep Vasudevan, Chief Business Officer, Raptee.HV - an EV startup. 

Sectoral experts also said that the positioning of the products will be important given that while both cater to different segments at varied price points. The companies have a lot to synchronise before locking this merger next year, including the dealership networks. 

While challenges remain, analysts are optimistic as both the companies have their respective strengths.

“Both being Japanese companies, they always focus on quality precision and customer satisfaction - an important aspect of this industry. Moreover, Honda has a plant in Rajasthan and Nissan in Tamil Nadu which will result in better customer reach and better logistics,” Vikram Gupta, Managing Director, Supreme Smart Power.