Nissan needs to triple profits to enter alliance with Honda

The Japanese publication Asia Nikkei shared details about a possible merger of the two automakers. Honda is believed to be requiring Nissan to prove its financial strength, aiming to earn about 400 billion yen ($2.6 billion) in fiscal 2026. Nissan forecasts it will only earn 150 billion yen ($0.95 billion) in fiscal year 2024.

In the first half of fiscal 2024, Nissan’s net profit fell from $2.02 billion to $131 million. To cut costs, a Japanese company is laying off employees, but this does not solve the biggest problem – difficulties in meeting sales targets. Honda’s financial stability contrasts with Nissan’s problems.

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If Nissan does not provide a clear strategy to overcome the crisis and increase net profit, then the alliance with Honda may not take place. Honda’s president explicitly stated that Nissan must be a company with “its feet on the ground.” After production capacity cuts, Nissan will be able to produce four million cars a year. However, the expected result for fiscal year 2024 is only 3.4 million vehicles.

Honda requires Nissan to do more than just improve its financial performance. The Japanese side insists that the alliance with Renault remains a thing of the past. The French auto giant has a 35.7% stake in Nissan, and the authorities in the Land of the Rising Sun do not want the automaker to fall under foreign influence.

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