"Sales in China are declining step by step. Can the merger between Honda Motor Co., Ltd. Sponsored ADR (HMC.US) and Nissan turn the tide?"

Note that sales data released on Wednesday showed that the merger of Honda Motor Co., Ltd. Sponsored ADR (HMC.US) and Nissan Motor Corporation would give these two struggling Japanese brands the strength to compete with China's BYD Company Limited. Earlier this week, Honda proposed a deal equivalent to acquiring Nissan, with the company selling 3.43 million cars globally in the 11 months before 2024. Another statement indicated that Nissan had just surpassed 3 million cars in sales. China's largest car manufacturer, BYD Company Limited, sold 3.76 million cars during the same period, clearly showing that Nissan and Honda are weaker individually but could have a chance if they join forces. Both Honda and Nissan have faced challenges in competing with local Chinese car manufacturers. China surpassed Japan last year to become the world's largest car exporting country, and is expected to further extend its lead by 2025. Both companies have had to reduce their workforce and production in China, and Mitsubishi Motors, which could potentially participate in the Honda-Nissan merger, has almost completely withdrawn from China, the world's largest car market. Honda's sales in China in November dropped by 28% compared to the same period in 2023, with production down 38%. Nissan's sales in China in November fell by 15.1%, with local production down 26%. Globally, Honda's sales in November decreased by 6.7% to 324,504 units, with production down by 20.4%. Nissan's global sales in November decreased by 1.3% to 278,763 units, with production down by 14.3%. The merger of Honda and Nissan will also pose a greater threat to Toyota Motor Corp. Sponsored ADR, the world's largest car manufacturer, followed by Volkswagen. Due to low demand and production halts at two factories, Toyota's global sales stagnated in November. Toyota Motor Corp. Sponsored ADR manufacturers reported sales figures on Wednesday for last month (including subsidiary Daihatsu Motor Co. and Hino Motors Limited), totaling 984,348 units, down by 0.2% year-on-year. Production decreased by 9.4% to 966,921 units. Toyota's business is also feeling pressure from locally produced electric cars in China and from intense competition in the US hybrid gasoline-electric car market. Like Honda and Nissan, its dominant position in the Southeast Asian market is gradually being eroded by Chinese competitors. Overall, global new car demand has been weak this year, with Toyota reducing production due to regulatory investigations and recalls both domestically and internationally, further exacerbating the situation. From January to November, Toyota's production in Japan decreased by 7.3%, and in China it decreased by 15.2%, highlighting the intensified competition in Asia's largest economy. Last month, Toyota's production in China decreased by 1.6% compared to the same period. However, despite Toyota's stagnant sales performance, investors are not concerned after Toyota announced plans to double its return on equity target to 20%.