“Isn’t it just Honda and Nissan?” Will alliances continue to grow? [2025 Automotive Industry Predictions]

Further consolidation in the automotive industry

I predicted that in 2023, “automakers will reconsider their EV commitments!” and in 2024, “auto prices will rise even further!”, and I was right. These predictions aren’t prophecies at all; most people who have been following trends in the automotive industry have likely noticed them. In other words, it seems like everything happened as planned in both 2023 and 2024. So, what will happen in 2025?

As anyone who has been closely following the automotive industry will already have noticed, further alliances and consolidation within the industry, including parts suppliers, are likely to continue. A symbol of this is the Honda-Nissan business integration plan announced at the end of the year. Many people seem to have lost sight of the true essence of this issue, but a business integration is not about merging multiple companies; it is about keeping each individual company and brand in existence while making each company’s shares owned by a holding company and unifying decision-making. So the question being raised here and there—”Will Honda and Nissan, two companies with completely different structures, create synergy by joining forces?”—is misplaced. Rather, it’s the decision-making that’s important.

So, what kind of decisions will the holding company make? The main focus will likely be on maintaining the Honda and Nissan brand identity while continuing to share the basic technologies and components needed for the electrification and intelligence of cars. There’s a chance that they may go even deeper to improve efficiency in these areas, but in my opinion, this is the main reason they are merging.

Overlapping markets are actually a good thing

Why? Going forward, electrification and intelligence in automobiles will become even more important, and there’s no doubt that they will become the most fundamental value shaping the value of automobiles. However, development and parts procurement in this area are extremely expensive. That’s why we are trying to reduce costs by standardizing such development and parts procurement as much as possible among the two companies (and potentially three companies, including Mitsubishi Motors).

Moreover, in many cases, the technological developments and basic components that form the basis of electrification and intelligence do not significantly affect the character of the car itself. This is because it is basically software that controls them, and the character can be created in any way depending on the software. On the contrary, what is important when it comes to commonality is the general performance and price range, so it is actually advantageous for markets to overlap, as with Honda and Nissan (and Mitsubishi?).

So, I stood alone in the press conference thinking that many of the questions the media were asking were off the mark.

Further efforts toward rationalization are needed

Of course, there’s no guarantee that this merger will be a complete success. If one company were to suddenly fall into financial difficulties, the other would likely be dragged down by it, and unless product development is aligned to a certain extent, the benefits of increased efficiency won’t be fully realized. Avoiding such a situation while building a robust structure is the mission of the management team.

Similar efficiency improvements will be equally required of other automakers and parts suppliers. While the Toyota-Volkswagen alliance, which already has a sufficient corporate scale, and BYD will be able to do well, most of the remaining companies will need to make further efforts toward streamlining. In other words, the Honda-Nissan merger can be seen as merely the starting gun for a new race to improve efficiency and rationalize within the automotive industry.