Here’s what a blockbuster Nissan-Honda merger could mean for the auto industry

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Nissan Motor CEO Makoto Uchida (L) listens to Honda Motor CEO Toshihiro Mibe (R) attend a joint press conference on March 15, 2024 in Tokyo, Japan. 
Tomohiro Ohsumi | Getty Images News | Getty Images

Top Japanese carmakers Nissan Motor and Honda Motor are understood to be exploring a blockbuster merger, sending shock waves through the global automotive industry as the two rival companies seek to stay competitive on the road to full electrification.

Nissan and Honda are planning to enter into negotiations for a merger, Japanese business newspaper Nikkei reported overnight, citing sources close to the matter and noting that the domestic peers expected to sign a memorandum of understanding shortly. The two companies will also reportedly look to bring Mitsubishi Motors, in which Nissan is the top shareholder with a 24% stake, into the deal.

The prospective tie-up could create the world’s third-largest auto group by vehicle sales, with 8 million sales annually, according to Citi. That would place Nissan-Honda-Mitsubishi behind fellow Japanese automaker Toyota Motor and Germany’s crisis-stricken Volkswagen, respectively.

In similar statements, Nissan and Honda neither confirmed nor denied the Nikkei report.

The merger report comes at a time when many auto giants are struggling to cope with increased global competition from bigger electric vehicle makers such as Tesla and China’s BYD.

Nissan and Honda previously forged a strategic partnership in March to collaborate on producing key components for EVs.

A megamerger, however, is expected to face several obstacles. Analysts have expressed concerns about the likelihood of political scrutiny in Japan, given the potential for job cuts if a deal pushes through, while the unwinding of Nissan’s alliance with French vehicle manufacturer Renault is regarded as pivotal to the process.

Peter Wells, professor of business and sustainability at Cardiff Business School’s Centre for Automotive Industry Research, described the reported merger as a “really important” development — one that could help Nissan and Honda pool their assets, save money on costs and create the technologies they need for the future.

“There’s been a lot of speculation about the position of Nissan over the past 12 months or so. It’s been trying to equalize or balance out its relationship with Renault, but it’s been struggling,” Wells told CNBC’s “Street Signs Europe” on Wednesday.

“It’s been struggling in the market, it’s been struggling at home, it doesn’t have the right product line-up. There are so many warning signs, so many red flags around Nissan at the moment that something had to happen,” he added. “Whether this is the answer is another question.”

Shares of Nissan soared almost 24% on Wednesday, notching the firm’s best trading day in at least 40 years, according to data firm FactSet. The firm’s Tokyo-listed stock price remains nearly 25% lower year to date.

Honda shares, meanwhile, slipped 3.2% in premarket trading in New York.

Barriers to a possible merger

Asked whether consolidation between Nissan and Honda could emerge as a good recourse to combat the competition from Chinese EV carmakers, Cardiff Business School’s Wells said the deal could be characterized as “a traditional solution.”

“My concerns would be that perhaps they have left it a bit late, that they don’t have the current technology and set-up [or] the right product to compete in their key markets,” Wells said.

“For Nissan particularly, they are out of step with the U.S. market. That’s their major concern, and they cannot fix that very quickly,” he added.

Employees work on the assembly line of new energy vehicles at a factory of Chinese EV startup Leapmotor on April 1, 2024 in Jinhua, Zhejiang Province of China.
Vcg | Visual China Group | Getty Images

JPMorgan‘s Akira Kishimoto shared similar views on some of the barriers to a prospective Nissan-Honda merger, saying “the hurdles to overcome would be high.”

“At a minimum, we think Nissan needs to clarify where its particularly complex capital relationship with Renault, which involves the French government, will end up and also provide details on the restructuring proposal it announced,” Kishimoto said in a research note published Wednesday.

“We think Honda needs to show how it will manage major [battery electric vehicles] and battery investments in Canada,” Kishimoto said.

JPMorgan said it would now need to wait for any concrete announcements from either company.

‘Full-scale transformation of the auto industry’

“This tie-up is not entirely unexpected because obviously they announced their partnership earlier this year,” Lucinda Guthrie, executive editor at Mergermarket, told CNBC’s “Street Signs Europe” on Wednesday.

“Some of the reports I’ve seen claim that this came about as a result of Foxconn making an approach to Nissan. Now, with this particular transaction, I question whether it is going to be a hardcore merger or whether it is going to be more of a partnership,” she added.

Apple supplier Foxconn approached Nissan about taking a stake, Bloomberg reported Wednesday, citing an unnamed source. The Taiwan-based company has been investing heavily in EVs in recent years. CNBC has contacted Foxconn for comment.

Echoing the latest development, Honda recently tested the water over a partnership with General Motors, before ultimately deciding to walk away.

Speculation over consolidation between Honda and Nissan could follow a similar trajectory, Guthrie said.

“You have to bear in mind that this would have to come with the Japanese government’s blessing because there is the potential for workforce cuts but then, how are the Japanese automakers going to compete with the low-cost vehicles from China?” Guthrie said.

Nissan signage at a dealership in Richmond, California, US, on Friday, June 21, 2024.
Bloomberg | Bloomberg | Getty Images

Citi’s Arifumi Yoshida said a merger would likely have a negative impact for Honda, but a positive one for Nissan and Mitsubishi.

“Given Honda’s competitiveness in motorcycles and [hybrid electric vehicles] and the strength of its brand, we believe it is positioned to take on rivals for the next 5-10 years,” Yoshida said in a research note published Wednesday.

Yoshida nevertheless said the decision could be viewed as one made “in anticipation of the full-scale transformation of the auto industry.”

— CNBC’s Michael Wayland contributed to this report.

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26 Comments

  1. The anterior or front deltoid is primarily answerable for
    shoulder flexion and horizontal adduction. That is elevating your arm
    in entrance of you (e.g., entrance raise) and performing a chest fly movement [1,2].
    The barbell overhead carry puts your physique under plenty
    of rigidity whereas building shoulder strength and mass.
    What’s better is that the train doesn’t solely improve your bodily power, but also your
    mental toughness. Push-ups are one of the environment friendly,
    effective and best shoulder exercises for males – they’ll target your
    chest muscular tissues within the course of, too. The cable face pull targets your trapezius muscle tissue and
    other areas of the upper back, including all spherical energy and stability
    to your upper physique.
    So, drop some weight if you want to, and really give attention to using your
    delts to maneuver the load somewhat than momentum.
    Use Hussle to get unlimited entry to 1000’s of gyms across the UK.
    Whereas primarily a trap train, shrugs also engage the shoulders,
    particularly when performed with proper kind. The Sunshine Heavyweight belt-holder breaks down his training ahead of one other title protection. You can stand, kneel,
    or sit on the cable machine and use the rope attachment, or you’ll have
    the ability to just use a resistance band instead.
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    We have provide you with 4 primary the purpose why
    you ought to be utilizing dumbbells to hit your lure muscles.

    The higher-intensity model of upright rowing workout routines, dumbbell high pulls, add some explosive motion into the exercise.

    This means you’ll be able to throw around higher weight
    than you would have the power to with a strict upright row.

    To raise those huge weights, muscular tissues
    in your arms, chest (pectoralis major), again, core, and legs all
    chip in. In flip, this will enhance each exercise efficiency and everyday tasks.
    Of all front delt isolation workouts, entrance raises are
    one of the best train for isolating this a half of your shoulders.

    The dumbbell shoulder press works the identical muscular tissues
    because the barbell version however with dumbbells. Genetics
    additionally plays a significant function in how your body responds to
    training. Some might find that their entrance delts reply
    nicely and develop adequately from compound actions alone.
    Others may require focused isolation work for a balanced higher body.
    Lateral raises are the exercise that involves mind first after we think of exercises that may check the strength of our delts.
    They’re pretty much perfectly designed to isolate that exact a
    part of your anatomy. These are, by far, essentially the most simple exercise you’ll find a way to add to your arsenal
    if you’re trying to add muscle mass to the width of your shoulders.

    If the load you choose is too heavy, you threat pressure or damage.
    If it ends up being too light, you won’t be getting the workout you need.
    In Contrast to other joints in our physique, such as the
    elbow or knee, the shoulder joint can additionally be fairly cell.

    This important ball-and-socket joint permits our shoulders to maneuver
    in different instructions, like up, again, and sideways, so it’s easy to exercise.
    For the larger muscles of the neck to work as they should,
    the smaller muscular tissues need to do their job too. Doing
    this with weight towards gravity helps strengthen the smaller posterior neck muscle tissue.

    The chin up will work your arms extra, whereas the pull up will work your shoulders
    more. Examine out upright row alternate options to see which suits your routine greatest.
    Nothing beats activating these two crucial arm muscular
    tissues, that are situated on reverse sides of the upper
    arm. You should give your shoulders at least 24–48 hours of rest between workouts
    to allow for enough recovery and forestall injury.
    Nonetheless, working in heavy low-rep presses to increase your maximal power might be necessary as you turn into more advanced.
    This is considered one of my favorite workouts that I do each time I work out my shoulders.
    Weight training with dumbbells may be beneficial for reaching hypertrophy and growing impact on a particular muscle group.

    Start with lighter weights and steadily enhance as you build energy and
    control. Multiple causes encourage you to do shoulder dumbbell workouts;
    I’ve mentioned seven beneath. Furthermore, the broader
    grip allows some dishonest motion, thereby permitting you to carry extra weight.
    This train can work nicely with a medium to light-weight for higher reps.
    The Arnold Shoulder Press is a singular and efficient shoulder exercise
    popularized by Arnold Schwarzenegger. Be Taught how to do
    that time-efficient medial deltoid train right here. We will need to hit all
    areas to build an all-around strong shoulder.

    Both way, really attempt to pull the towel apart as you pull your elbows down. Lying flat down on the ground,
    seize every end of the towel and lift it above your
    head. This is a hard train to get incorrect, so it’s glorious for newbies to get further upper back
    volume. Next, decrease the dumbbell half method down and repeat yet one more contraction to the highest.
    Raise your arms in entrance of you and slightly out to the perimeters, as if making a Y shape.
    Rest your toes on a bench, chair, or different stable surface, and place your
    hands on the floor, shoulder-width apart. Walk your arms back while
    bending your hips and driving your butt up into the air in order that your torso is as vertical as attainable.

    In the case of pronated or impartial grip rear delt flyes or raises, the pronated grip will goal some muscle fibers in the rear delts that the impartial grip
    doesn’t and vice versa. Nevertheless, when many guys do wide-grip upright rows, it
    feels awkward and painful within the shoulder joint. To keep away from
    this, I suggest doing the Smith Machine One-Arm Upright
    Row. This motion places nearly all of the focus on the center head of the deltoid
    and minimizes ache and injury threat within the shoulder.
    One Other advantage of this train is that, as a end result of you’re solely
    using one arm, you probably can isolate each deltoid to promote balanced improvement.
    The capabilities of the anterior deltoid are flexion, horizontal flexion, and
    medial rotation of the shoulder joint.
    Additionally, being seated additionally supplies a greater, more steady base to push from which can place
    a higher demand on the delts. Pull-ups are
    a challenging compound train that targets the shoulders, arms, and again, making them
    a fantastic addition to any upper physique exercise. The reverse fly targets the rear deltoids, enhancing
    general shoulder steadiness and stability.
    And should you don’t want to use weights, take a look at
    these resistance band shoulder exericses. Proper type is crucial for optimum progress,
    so take observe of how these are performed. It’s exhausting to beat the
    appearance of bulging biceps, horseshoe-shaped triceps, and massively rounded shoulders.

    Then transfer to Workout 2 and repeat the process until you get by way of Exercise 5.

    As Quickly As you are via Exercise 5, you
    can begin over with Workout 1 assured that
    you just’re larger and stronger than you were earlier than. With Out
    middle and posterior improvement, the shoulders will look slender from both the front and the side.
    It can even end in imbalances, which is why physical therapist and power coach John Rusin recommends paying as much attention—or even more—to
    the rear and lateral deltoids. According to Israetel, the downside of cross-body lateral raises is the time
    expended on performing one arm at a time. From understanding your deltoids to toning your traps—and not forgetting rehabbing these rotator cuffs—building massive shoulders isn’t any easy task by any means.

    But with pain comes acquire, and if you put in the hard graft, you’ll have something to indicate off in your strapless
    sports bra or compression match shirt.
    While dumbbell lateral raises are a good way
    to construct main size on the middle deltoid head, I additionally love to use machine lateral raises.
    If your fitness center is equipped with this machine I highly encourage you to make use of it.
    Right Here, I’ve mapped out 4 weeks of shoulder training to level out how you can incorporate leaning dumbbell lateral raises into your program.

    Notice that I additionally included normal dumbbell lateral
    raises in these workouts. It Is still an excellent exercise—just one that must be tweaked every so often for optimum
    effectiveness. They additionally reported that the wider grip elevated muscle activity of the higher traps while reducing muscle activity of the biceps.

    Proceed in this fashion till you dropped all the way in which all
    the means down to the final plate on the load stack.

    The hardest half about working your shoulders is that they play such a huge position in working other muscle teams, like chest
    and back. By the time you get to focusing on your
    shoulders, they’re already worn out, but haven’t gotten the primary target they need to truly develop.
    While these muscles are significantly smaller than the deltoids, they are no much less important.
    A lot of shoulder accidents end result from a weak or damaged rotator cuff.

    The extent to which you’ll construct size and roundness in the traps, nevertheless, is basically determined by genetics.
    Some individuals have a tendency more towards longer,
    more streamlined traps than cumbersome ones.
    This train combines an upright row, external rotation, and
    shoulder press. You couldn’t have asked for a more difficult shoulder exercise.
    Opposite to what most suppose, you don’t want heavy dumbbells to
    coach the traps. Alternatively, you would maintain a dumbbell between your ankles if you don’t have access
    to a dip belt.
    The key is to concentrate on progressive overload, which implies steadily increasing
    your rep depend or the issue of these workouts as you
    get stronger. Cable front raises are a very efficient, in style anterior deltoid exercise.
    Like most cable workout routines, they keep the target muscular tissues
    under near-constant pressure, producing a deep burn and satisfying pump.

    Since I began doing a drop-set to failure after my final set of DB lateral raises, I’ve seen more progress
    in my facet delts than I did for virtually all of my
    training profession. There is nothing inherently mistaken with standard overhead presses and lateral raises.
    However, they may gradually lose their potency when you do them too usually.
    Your muscular tissues will get used to those actions, which means your workouts will become less productive.
    Take an empty barbell, or a light-weight barbell, and place
    it behind your back. ‘What you are doing right here is hitting these rear delts and the
    again of your shoulders, that are actually neglected, notably if you
    do a lot of bench urgent,’ says Tracey. Re-rack your barbell and grab
    a pair of dumbbells, it’s time for a seated dumbbell press.

    Lift the dumbbells out to your side with a slight bend at your elbows,
    keeping the weights higher than your forearms.
    Carry until your arms are parallel to the floor then slowly decrease to the beginning place.
    Drop sets and supersets are advanced strategies that intensify
    your exercise and stimulate muscle development. Drop sets,
    performed until muscle failure, are notably effective for
    shoulder workouts, pushing the muscular tissues past their traditional
    limits. Supersets, where two workouts are performed back-to-back with no relaxation, maximize muscle fatigue and endurance.

    The overhead press (also often known as the shoulder press, strict press, or army press) is doubtless one of the greatest shoulder workouts.

    By flip-flopping the order of the workouts, you may be slightly stronger in your single-joint movements but a bit weaker in your overhead presses, so
    adjust your weights accordingly. And whereas some people might not consider them an higher arm muscle, they actually maintain lots of aesthetic worth in creating a set of massive arms.
    If you need that capped look with shoulder
    muscular tissues that stick out to make a valley with your
    biceps, deltoid training is crucial. Face pulls strengthen rear delts, traps,
    and rotator cuffs, reducing injury danger and bettering shoulder stability.

    All three deltoid heads benefit from a range of intensities, usually between 30 and 85% of your 1RM.
    Split up your delt training into heavy (5-10 reps), average (10-20 reps), and lightweight (20-30
    reps) to focus on the muscle fibers in different
    ways. Your program also wants enough volume to build your medial (side) delt,
    giving your shoulder muscles greater width and density.
    A well-balanced coaching plan offering adequate volume to every of
    the three heads of the shoulder will work
    wonders in building cussed, lagging deltoids. When establishing
    for this train, start by inserting a bench on an incline.
    Grab two dumbbells and lie instantly on prime of the bench in order that the complete trunk is in contact.

    Strengthening your shoulders isn’t nearly aesthetics both.

    Stronger shoulders will assist improve your form throughout other workouts
    and also increase your PRs for compound lifts,
    as your muscular tissues work in tandem. Likewise, finding your excellent supplement match will result in even more epic muscle growth and
    supercharged shoulder energy. By this level, your rear delts are in all probability feeling a bit ignored, so let’s get them working, too.
    Simply ensure to begin out at a lighter weight and
    preserve that sluggish and controlled type.
    Watch the video above for the means to do cable raises,
    or follow the bullet points under if using light dumbbells.
    This means performing them one after the opposite, with no rest, for 10 reps each.

    This is one other of these uncommon workouts you could prepare
    a quantity of instances in a week, as a result of once more, you are building shoulder stability.
    You’re also doing more than focusing on your delts, coaching
    your mid-back muscular tissues too. As with
    chest, the triceps can sometimes be a limiting think about shoulder coaching, particularly in your
    presses. If your triceps are at all times giving out earlier
    than your shoulders feel fully stimulated, you may by no means be able to take the delts to complete failure on these multijoint
    exercises. Here, you fatigue the delt heads with single-joint actions first, then do multijoint overhead presses whereas your triceps are still strong.

    Simply remember to consume enough protein for recovery (1.6-2g per KG of bodyweight), and sufficient calories
    to gasoline your shoulder workouts. Each exercise here combines
    one of the best shoulder workouts like presses and raises with simply sufficient depth and volume to
    construct 3D delts. With a growth-focused approach to diet and
    supplementation, these workouts will ship critical dimension and surprising strength gains.
    This is dependent upon how many shoulder workout routines you are doing per session. In Accordance to studies, it is the
    complete weekly training volume, somewhat than the workout frequency, that
    issues most for muscle progress [2]. One Other study discovered
    optimum training quantity to take a seat between 9-15 sets at 70-80% 1 rep max [3].

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