Honda and Nissan Merger: Implications for Indonesia's Automotive Industry

JAKARTA, investortrust.id –  There is no significant impact on Indonesia's automotive industry following the Honda-Nissan merger, an automotive analyst said. 

Automotive analyst Riyanto from the Institute for Economic and Social Research (LPEM) at the University of Indonesia (UI) said the merger of these two automotive giants does not necessarily lead to cheaper car production costs, and thus, it does not significantly affect the domestic automotive market.

“If there's a merger, people might expect a drop in car prices,” Riyanto said during an interview at the Ministry of Industry office, South Jakarta, on Tuesday, January 14, 2025.

Furthermore, Riyanto noted that the merger between Honda and Nissan aims for corporate efficiency, especially as Nissan recently conducted a massive layoff of 9,000 employees.

However, Riyanto pointed out that the merger between Nissan and Honda is not intended to compete with the vehicle products from Chinese companies like BYD, Wuling, and Chery.

“The segments are different. Japan still focuses on hybrid or Internal Combustion Engine (ICE) products, while Korean and Chinese car manufacturers have begun marketing hybrids in Indonesia,” he explained.

Previously, Honda CEO Toshihiro Mibe stated that both companies needed a larger scale to compete in developing new technologies such as electric vehicles (EVs) and intelligent driving systems.

According to Mibe, this business integration will provide advantages that cannot be achieved with the current collaborative framework. The agreement aims to share resources and knowledge, create economies of scale, and synergy while protecting each brand's identity.

A holding company will be formed as the main entity for Honda and Nissan, which will be listed on the Tokyo Stock Exchange. Honda, being the larger entity, will nominate most of the board members of the combined entity. The merged group has the potential to record revenues of 30 trillion yen ($191.4 billion) and an operating profit of more than 3 trillion yen.