Honda-Nissan Merger: What About India?

Two Japanese automobile giants, Honda and Nissan, are moving towards a potential merger, but it remains unclear how their Indian operations will be immediately impacted. Nissan has an alliance with French carmaker Renault, where the two share the Oragadam plant near Chennai.

As of October, the Renault Nissan Automotive India (RNAIPL), a dedicated manufacturing facility for the Renault-Nissan Alliance, has produced over 4.5 million powertrain units at its facility in Oragadam.

RNAIPL manufactures Renault and Nissan cars for both the Indian and export markets, with over 2.75 million cars produced since operations began in 2010.

Since production started in May 2010, RNAIPL has produced seven different types of engines and three varieties of gearboxes.

RNAIPL's powertrain division reached the production milestone of 1 million engines in 2016, within six years of starting production, and has also produced over 160,000 units of electric vehicle reducer components for export.

Speaking to reporters in Tokyo, Makoto Uchida of the Nissan Motor Corporation, said that synergies with Renault are another possibility they are exploring. He added that they will continue to hold discussions with existing partners.

Uchida emphasised that 'nothing is decided today'. If they see a promising project that positively contributes to brand power, discussions can be taken forward.

Nissan Motor India declined to comment on the matter, and Honda Cars India also did not comment.

In an interview with PTI a few days ago, Nissan India Operations President Frank Torrés said that the Japanese automaker's plans to turn around its Indian operations remain intact.

He mentioned that Nissan is looking to increase its headcount in India -- adding 600 people at the Chennai plant to introduce a third shift. At the same time, Nissan announced it would cut 9,000 jobs and reduce global production by 20 per cent.

'Nissan is betting big on India... and the plans (for India) remain intact despite this global turbulence,' he said.

In July this year, Nissan India announced it would introduce five models over the next 30 months as part of its plan to turn around its operations in the fast-growing Indian car market.

The company has set a target of trebling its domestic and export volumes to 100,000 units each per annum by the end of 2025-2026.

At present, both Japanese auto giants have a marginal share of the domestic auto market in India -- Honda holds 1.39 per cent while Nissan has 0.73 per cent of India's 4 million-unit auto market.

Between April and November this financial year, while domestic dispatches have fallen for both, exports have soared. Honda Cars registered a 154 per cent increase in exports from India (as its Elevate became a runaway hit in Japan), and Nissan posted a strong 61.6 per cent increase.

Industry insiders believe that both companies could benefit in the Indian market from the potential merger. "Chinese players like BYD are gaining a foothold in India, and the two Japanese giants plan to collaborate on technologies and build on their synergies to compete with Chinese EV players," said an industry veteran.

Synergies could range from offering a wider range of products to standardising vehicle platforms for cost efficiencies, as well as sourcing synergies.

Toyota and Suzuki have joined hands to share technology like hybrids and also cross-badge vehicles in India as part of their global partnership.