| Thanks for reading Hyperdrive, Bloomberg’s newsletter on the future of the auto world. Read today’s featured story in full online here. Programming note: Hyperdrive will break for the rest of this week and be back on Monday, Dec. 30. Happy holidays! Honda sketched plans for a drawn-out deal that amounts to a takeover of Nissan in all but name, as Japan’s automakers struggle to keep up in an increasingly competitive global car industry. The two announced a tentative agreement Monday to set up a joint holding company that will aim to list shares in August 2026. While their executives called the transaction a merger, Honda will take the lead in forming the new entity and nominate a majority of its directors. Nissan’s partner Mitsubishi Motors may also participate in the deal. Honda and Nissan both are having trouble contending with ascendant domestic automakers in China, which surpassed Japan as the world’s largest car-exporting nation last year and is pulling further ahead in 2024. Honda CEO Toshihiro Mibe spoke to the level of difficulty ahead for the companies when he said during a press conference that their goal is to be competitive by 2030. “Honda and Nissan merger synergies will take time to emerge if a deal is concluded in 2025,” Tatsuo Yoshida, a senior industry analyst for Bloomberg Intelligence, said in a note. “Nissan may get relief from its financial strain, while Honda’s near-term benefits may be limited.” Honda did offer something of a sweetener for its shareholders, announcing plans to buy back as much as ¥1.1 trillion yen ($7 billion) of its stock by this time next year. The upper limit of the buyback amounts to 24% of issued shares. A rescue by Honda would avert total disaster for Nissan and Mitsubishi Motors, whose standings have weakened since the arrest of their former Chairman Carlos Ghosn in November 2018. Just over a year after Nissan accused its longtime leader of financial misconduct, he fled Japan for Lebanon. Ghosn, 70, has denied all charges and alleged Nissan defamed him. Mitsubishi Motors, which is 24.5% owned by Nissan, signed a preliminary agreement to explore joining the deal with Honda, saying it expects to firm up the decision by the end of January. Renault, Nissan’s biggest shareholder, acknowledged its longtime alliance partner’s announcement, saying the talks with Honda were at still at an early stage. The French carmaker, which owns 36% of Nissan, also said in a statement that it will consider all options and continue executing its strategy, which includes joint projects with Nissan. Honda’s CEO Mibe said combining with Nissan would generate billions of yen in incremental operating profit, though he didn’t offer timelines. The 63-year-old executive also didn’t address how the companies would deal with pressing issues such as closing factories. “Both companies will continue as wholly owned subsidiaries of the joint holding company with their respective brands in place,” Mibe said. Honda’s share buyback supersedes a previously announced plan to repurchase ¥100 billion worth of stock from Nov. 7 of this year through October 2025. The large buyback is being launched now because Honda’s ability to repurchase shares is expected to be restricted during the lead-up to the deal the companies aim to close in 2026. Nissan has withered in the years since Ghosn’s ouster, squandering its position as an early contender in the shift to fully electric vehicles. In China, the soaring popularity of locally made EVs has left some foreign brands fighting for survival. Honda and Nissan both have had to pare back staffing and production, while Mitsubishi Motors has all but pulled out of the world’s biggest car market. Nissan also has been on the back foot amid a resurgence in popularity of gas-electric hybrid cars in the US. While Toyota dominates the powertrain segment, Honda is relatively well positioned and could provide a welcome boost. The combination of falling sales in the US and China has been devastating for Nissan, leading the company to cut thousands of jobs, slash production capacity and lower its annual profit outlook by 70%. “Partnering with Honda isn’t a sign that we’re giving up on our plans to turn Nissan around,” Nissan CEO Makoto Uchida said Monday.  Uchida, left, and Mibe on Monday. Photographer: Kiyoshi Ota/Bloomberg Nissan was rescued from its last financial crisis more than two decades ago, when Renault swooped in with a cash injection and dispatched Ghosn to orchestrate a turnaround. The exiled executive weighed in on the deal talks from Beirut, telling Bloomberg Television last week that Nissan is in “panic mode.” Speaking to the Foreign Correspondents’ Club of Japan via teleconference on Monday, Ghosn pointed out that Nissan’s unit sales have fallen more than 40% since 2018 and the carmaker is barely breaking even. Nissan’s Uchida and Honda’s Mibe said they didn’t know anything about Hon Hai Precision, the Taiwan-based iPhone maker known as Foxconn, having interest in taking over Nissan. People familiar with the matter said last week that Foxconn had sent a delegation to meet with Renault in France. However, Foxconn has put its interest in pursuing Nissan on hold while negotiations with Honda play out, one person said. — By Nicholas Takahashi and Tsuyoshi Inajima - VW executives face pay cuts as part of restructuring deal.
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 An employee fitting a Mercedes-Benz badge to a vehicle in Bremen, Germany. Photographer: Wolfram Schroll/Bloomberg Germany’s Gerhardi Kunststofftechnik weathered Napoleon’s invasion, the Great Depression and two world wars, only to buckle under Europe’s recent automotive tumult. The company filed for bankruptcy last month, plunging its 1,500 employees into an uncertain future. Gerhardi — which makes the plastic star mounted on the grill of Mercedes sedans — is one of hundreds of small manufacturers in Europe’s auto supply chain that are struggling to stay afloat amid a sales slowdown and rocky transition to electric vehicles. With painful cuts planned at Volkswagen, Stellantis and Ford, suppliers’ outlook may only get worse. | 
