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Saudi Arabia Aims to Boost National Automotive Industry

The Saudi Minister of Industry and Mineral Resources, Bandar al-Khorayef, and the Minister of Economy and Planning, Faisal al-Ibrahim, signed the agreement with Hyundai Motor Company (Asharq Al-Awsat)
The Saudi Minister of Industry and Mineral Resources, Bandar al-Khorayef, and the Minister of Economy and Planning, Faisal al-Ibrahim, signed the agreement with Hyundai Motor Company (Asharq Al-Awsat)
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Saudi Arabia Aims to Boost National Automotive Industry

The Saudi Minister of Industry and Mineral Resources, Bandar al-Khorayef, and the Minister of Economy and Planning, Faisal al-Ibrahim, signed the agreement with Hyundai Motor Company (Asharq Al-Awsat)
The Saudi Minister of Industry and Mineral Resources, Bandar al-Khorayef, and the Minister of Economy and Planning, Faisal al-Ibrahim, signed the agreement with Hyundai Motor Company (Asharq Al-Awsat)

The Saudi Ministry of Industry and Mineral Resources signed a memorandum of understanding with Hyundai Motor Company to promote the automotive industry in the Kingdom.

The MoU was signed in the presence of the Minister of Industry and Mineral Resources, Bandar al-Khorayef, and the Minister of Economy and Planning, Faisal al-Ibrahim.

The MoU aimed to enhance cooperation in vehicle manufacturing in the region to realize the national strategic goals for the industry in developing local manufacturing capabilities and is in line with the targets of the Saudi Vision 2030 that seeks to diversify the economic base in Saudi Arabia.

The agreement stipulated planning for building a Saudi Arabia-based assembly plant with the CKD system for electric and internal combustion engine cars after Hyundai showed high interest.

It also sought to explore joint investment opportunities with Saudi Arabia to achieve entrepreneurship in businesses and projects that guarantee environmental safety and sustainability.

The approach came as part of a government strategy to support the transition to clean energy in the automotive industry.

In early November, Saudi Crown Prince Mohammed bin Salman launched the "Ceer" company, branded as the first Saudi electric vehicle brand.

The new company would contribute to attracting local and international investments and create many job opportunities for local competencies.

Last May, the Ministry of Investment announced a significant investment from Lucid Group as the firm began constructing an advanced automotive manufacturing plant that targets 150,000 vehicles per year with more than $3.2 billion in assets.

The facility is also expected to contribute significantly to job creation and development of the skill base of the Saudi automotive manufacturing sector.

Investment Minister Khalid al-Falih stated that the development of the electric car industry in Saudi Arabia reflected the strong commitment to attracting qualitative investments that contribute to diversifying the economy, transferring technology, and developing skills among Saudi youth.

It also reflected the Kingdom's global commitment to promoting a green economy and reducing carbon emissions.

Falih added that the development of the electric car manufacturing sector is part of the Kingdom's broader efforts to advance the industrial sector and advanced industries.

The sector would also play an essential role in the Kingdom's transition to a greener economy and in the Kingdom's efforts to realize its commitment to reach net zero by 2060.

The Lucid factory will produce four electric cars from 2023, reaching total capacity in 2028.

The planned factory in the Kingdom would produce two exclusive models. The facility will export nearly 95 percent of its production, supporting the Kingdom's balance of payments. It would also back supply chains and open new investment opportunities.

Lucid's electric vehicle factory would be located in the Industrial Valley of King Abdullah Economic City, on the Red Sea coast in the west of the Kingdom, to meet energy needs, local supply chains, and a location that facilitates access to global logistics.

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Honda and Nissan Start Merger Talks in Historic Pivot

Makoto Uchida, Director, Representative Executive Officer, President and CEO of Nissan Motor Corporation, Toshihiro Mibe, Director, President and Representative Executive Officer of Honda and Takao Kato, Director, Representative Executive Officer, President & CEO of Mitsubishi Motors, attend a joint press conference on their merger talks, in Tokyo, Japan, December 23, 2024. REUTERS/Kim Kyung-Hoon
Makoto Uchida, Director, Representative Executive Officer, President and CEO of Nissan Motor Corporation, Toshihiro Mibe, Director, President and Representative Executive Officer of Honda and Takao Kato, Director, Representative Executive Officer, President & CEO of Mitsubishi Motors, attend a joint press conference on their merger talks, in Tokyo, Japan, December 23, 2024. REUTERS/Kim Kyung-Hoon
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Honda and Nissan Start Merger Talks in Historic Pivot

Makoto Uchida, Director, Representative Executive Officer, President and CEO of Nissan Motor Corporation, Toshihiro Mibe, Director, President and Representative Executive Officer of Honda and Takao Kato, Director, Representative Executive Officer, President & CEO of Mitsubishi Motors, attend a joint press conference on their merger talks, in Tokyo, Japan, December 23, 2024. REUTERS/Kim Kyung-Hoon
Makoto Uchida, Director, Representative Executive Officer, President and CEO of Nissan Motor Corporation, Toshihiro Mibe, Director, President and Representative Executive Officer of Honda and Takao Kato, Director, Representative Executive Officer, President & CEO of Mitsubishi Motors, attend a joint press conference on their merger talks, in Tokyo, Japan, December 23, 2024. REUTERS/Kim Kyung-Hoon

Honda and Nissan have started talks toward a potential merger, they said on Monday, a historic pivot for Japan's auto industry that underlines the threat Chinese EV makers now pose to some of the world's best known car makers, Reuters said.
The integration would create the world's third-largest auto group by vehicle sales after Toyota and Volkswagen. It would also give the two companies scale and a chance to share resources in the face of intense competition from Tesla and more nimble Chinese rivals, such as BYD.
The merger of the two storied Japanese brands - Honda is Japan's second-largest automaker and Nissan its no. 3 - would mark the biggest reshaping in the global auto industry since Fiat Chrysler Automobiles and PSA merged in 2021 to create Stellantis in a $52 billion deal.
Smaller Mitsubishi Motors, in which Nissan is top shareholder, was also considering joining, the companies said. The chief executives of all three companies held a joint press conference in Tokyo.
"The rise of Chinese automakers and new players has changed the car industry quite a lot," Honda CEO Toshihiro Mibe told the press conference.
"We have to build up capabilities to fight with them by 2030, otherwise we'll be beaten," he said.
The two companies would aim for combined sales of 30 trillion yen ($191 billion) and operating profit of more than 3 trillion yen through the potential merger, they said.
They aimed to wrap up talks around June 2025 and then set up a holding company by August 2026, at which time both companies' shares would be delisted.
Honda has a market capitalisation of more than $40 billion, while Nissan is valued at about $10 billion.
Honda will appoint the majority of the holding company's board, it said.
Combining with Mitsubishi Motors would take the Japanese group's global sales to more than 8 million cars. The current No. 3 group is South Korea's Hyundai and Kia .
Honda and Nissan have been exploring ways to bolster their partnership, including a merger, Reuters reported last week.
The two companies said in March they were considering cooperation on electrification and software development. They agreed to conduct joint research and widened the collaboration to Mitsubishi Motors in August.
Last month, Nissan announced a plan to cut 9,000 jobs and 20% of its global production capacity after sales plunged in the key China and U.S. markets. Honda also reported worse-than-expected earnings due to declining sales in China.
Like other foreign carmakers, Honda and Nissan have lost ground in the world's biggest market China to BYD and other local brands that make electric and hybrid cars loaded with innovative software.
In a separate online press conference with the Foreign Correspondents Club of Japan on Monday, former Nissan chairman Carlos Ghosn said he did not believe the Honda-Nissan alliance would be successful, saying the two automakers were not complementary.
Ghosn is wanted as a fugitive in Japan for jumping bail and fleeing to Lebanon. His 2018 arrest for financial wrongdoing pitched Nissan into a crisis.
French automaker Renault, Nissan's largest shareholder, is open in principle to a deal and would examine all the implications of a tie-up, sources have said.
Taiwan's Foxconn, seeking to expand its nascent EV contract manufacturing business, approached Nissan about a bid but the Japanese company rejected it, sources have told Reuters.
Foxconn decided to pause the approach after it sent a delegation to meet with Renault in France, Bloomberg News reported on Friday.
Shares in Honda ended the day up 3.8%, Nissan rose 1.6% and Mitsubishi Motors gained 5.3% after the news reports on the details of the planned merger, while the benchmark Nikkei closed up 1.2%.