Updated 20:21 IST, July 29th 2024
Japan's stock rally highlights, auto manufacturer's alliance amid EV transition
A new alliance among Japan’s leading auto manufacturers has flared a notable stock rally, reflecting investor confidence amid global concerns.

Japan's stocks rally: A new alliance among Japan’s leading auto manufacturers has flared a notable stock rally, reflecting investor confidence amid global concerns over the industry's shift toward cleaner and smarter vehicles. Mitsubishi Motors, Honda Motor, and Nissan Motor have announced a strategic partnership, driving Mitsubishi’s shares up by 5 per cent and contributing to a combined $2 billion increase in market valuation for the trio.
The alliance, reported by Nikkei, is balanced to enhance collaboration in automotive technology. Although specific details about the partnership remain limited, the scope of cooperation includes automotive software platforms, key electric vehicle (EV) components, and other unspecified complementary products. This move follows Nissan and Honda’s March announcement of their intention to explore a strategic partnership focused on electrification.
The combined sales of Mitsubishi, Honda, and Nissan totaled nearly 8 million units last year. It suggests substantial potential for economies of scale in developing and sourcing key technologies, such as batteries. This partnership aims to leverage these synergies to address the high costs associated with EV production. In comparison, Toyota Motor, the largest global auto manufacturer by sales, delivered just over 11 million vehicles in the fiscal year ending March, with operating margins of 11 per cent. This is notably higher than the margins reported by Honda, Mitsubishi, and Nissan.
Mitsubishi, which sold fewer than 1 million cars last year, still stands to gain significantly from this alliance with its larger counterparts. The company has faced financial challenges, with earnings dropping by 38 per cent in the June quarter due to rising costs and falling volumes. Despite evolving EVs with the i-MiEV in 2009, Mitsubishi has lagged in the market, with EVs and hybrids comprising only 7 per cent of its sales in 2021. The company aims to increase this share to 50 per cent by 2030.
The partnership comes at a time when global auto manufacturers, including Nissan, Stellantis, and Hyundai Motor, are struggling with rising marketing costs and sluggish demand. Investors’ positive response to the alliance highlights the industry's urgent need to simplify operations and reduce costs while advancing toward cleaner vehicle technologies.
(with Reuters inputs)
Published 20:21 IST, July 29th 2024