Merger plans Toyota Boosts Profit Forecast as Honda and Nissan Stay Separate

Nissan has suspended merger talks with Honda. Meanwhile, Japan's largest car manufacturer is stabilizing its profitability.

The merger plans of the two Japanese car manufacturers Honda and Nissan are in danger of collapsing. Nissan will suspend the merger talks with Honda as no agreement has yet been reached on the terms of the deal, the Japanese business portal "Nikkei" reported on Wednesday. Both sides had not been able to agree on a valuation of the two companies under the umbrella of a holding company. Nissan had also rejected a proposal from Honda to take over Nissan as a subsidiary.

Japan's second (Honda) and third largest car manufacturers have been negotiating a merger in the face of tough competition for electric vehicles. A holding company was under discussion. Together, the two companies would form the third-largest car manufacturer in the world with sales of more than eight million vehicles, bringing them closer to Toyota and Volkswagen. The aim of the talks to date has been to pool resources in order to better compete with Tesla and Chinese electric vehicle manufacturers.

Nissan in particular is under economic pressure. It was only in November that the company announced 9,000 job cuts worldwide. Among other things, global production capacities would be reduced by 20 percent and management would be reorganized. The Group, which has 134,000 employees worldwide, also lowered its forecast once again.

Honda/Nissan

A new Japanese automotive giant is becoming increasingly likely

Meanwhile, Toyota has raised its earnings forecast for the current financial year (as at the end of March). Following a slump in the third quarter, this move signals confidence that business will pick up in the final quarter. Nevertheless, Toyota continues to expect a decline in profits for 2024/25. The share price rose by up to 4.3 percent in Tokyo.

The management now expects an operating result of 4.7 trillion yen (equivalent to just under 30 billion euros  or approx. 31.31 billion  USD) for the financial year instead of 4.3 trillion yen previously, as the company announced in Tokyo on Tuesday. Analysts had already estimated an average of 4.8 trillion yen. Robust demand for hybrid vehicles in the USA contrasts with weaker business in Japan and China. Sales are now expected to rise from 46 trillion to 47 trillion yen. In the previous year, Toyota achieved sales of just over 45 trillion yen and an operating profit of 5.35 trillion yen.

Less sales—more turnover

In the third quarter to the end of December, operating profit fell by 28% to 1.2 trillion yen, which was below analysts' expectations. Turnover, on the other hand, increased from 12 to 12.4 trillion yen.

Toyota sold 10.8 million cars in the last calendar year, slightly less than the 11.2 million sold in the previous year. However, this was enough to defend its position as the world's largest car manufacturer ahead of Volkswagen for the fifth time in a row.