Jakarta, CNN Indonesia —

On Monday, two prominent Japanese automotive companies, Honda and Nissan, announced their merger. This strategic alliance will lead to the formation of a new parent company.

Though still in the planning stages, both Honda and Nissan anticipate that the establishment of this parent company will be completed by August 2026.

The two firms signed a memorandum of understanding (MoU) on August 1, 2024, which outlines their collaborative efforts in research and technology focused on software-defined vehicles (SDV), particularly in artificial intelligence (AI) for self-driving technology and electrified vehicles.

Moreover, this merger aims to broaden mobility solutions. Here are some key facts surrounding the merger of these automotive giants, Nissan and Honda:

Not a Rescue Mission for Nissan

Honda’s CEO, Toshihiro Mibe, emphasized that the merger with Nissan is not a rescue operation for the struggling company.

He noted that this merger represents a significant transformation within the Japanese automotive industry.

Recently, Nissan announced plans to lay off 9,000 employees and revise its annual sales targets. Additionally, the company reported a staggering 93 percent drop in net profit for the first half of 2024.

Strengthening the Supply Chain

The integration of procurement functions will enable Honda and Nissan to enhance their competitiveness by aligning component sourcing from a unified supply chain.

By collaborating with business partners, both companies can acquire components more efficiently, supporting optimal vehicle development and production.

Standardization of Vehicle Platforms

The various platforms utilized by both companies are expected to yield more competitive products while simultaneously reducing production and development costs.

Through the standardization of vehicle platforms, the companies will be able to offer a range of vehicles, including internal combustion engine (ICE) models, hybrids (HEV), plug-in hybrids (PHEV), and electric vehicles (EV). This strategy is anticipated to boost sales volume and profitability.

R&D Synergy

The integrated research and development (R&D) efforts will focus on technologies that encompass applications and platforms for software-defined vehicles (SDV). This collaboration is expected to accelerate the development of consumer-friendly vehicle technologies at a reduced cost.

Optimizing Manufacturing Systems and Facilities

Optimizing production facilities is a top priority in this merger. By sharing production lines and integrating facilities, both companies aim to enhance plant utilization, reduce costs, and improve efficiency. A focus on reducing carbon emissions from factories is also a shared goal.

Efforts to Reduce Operational Costs

The merger will concentrate on merging systems and operational processes, including back-office functions, to achieve significant efficiencies.

By standardizing processes and integrating operations, both companies can significantly cut costs, enhance profitability, and expedite decision-making.

Financial Management

This merger will allow both firms to enhance operational functions ranging from marketing to production and logistics for the sustainability of vehicles globally.

Developing Quality Human Resources

Human resources are a vital asset for both companies. Following integration, employee exchanges and technical collaboration will be intensified to foster skill development.

Both companies believe that a skilled workforce will be essential in transitioning towards the era of electric vehicles and intelligent technology.

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(can/dmi)

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