Honda and Nissan merge to form third-largest automaker

Explore the possibility of Mitsubishi participation, participation and collaborative sharing

In a landmark development for the global auto industry, two of Japan’s leading automakers, Honda and Nissan, announced plans to merge, potentially creating the world’s third-largest auto group by sales. The integration, which includes Mitsubishi Motors, is aimed at achieving significant synergies amid growing competition between electric carmakers and Chinese automakers.

Establishment of joint holding company

Honda and Nissan have signed a memorandum of understanding (MoU) to initiate business integration discussions and may establish a joint holding company by August 2026. The holding company will oversee the combined business, which aims to achieve sales of 30 trillion yen ($191 billion) and operating profits of more than 3 trillion yen. As part of the integration, shares of both companies will be delisted.

Mitsubishi Motors, in which Nissan has a large stake, is also expected to join the new entity. The combined group’s annual sales are expected to exceed 8 million vehicles, surpassing South Korea’s Hyundai and Kia, and firmly ranking third in the world, behind Toyota and Volkswagen.

Strategies to meet market challenges

The merger marks one of the most significant shifts in the global auto industry since Fiat Chrysler Automobiles NV and PSA Groupe PSA joined forces to form Stellantis in 2021. The merger comes as Honda and Nissan face growing pressure from nimble Chinese automakers such as Tesla and BYD. Electric and hybrid vehicles market.

Honda CEO Mibe Toshihiro Mibe stressed the urgency of adapting to the rapidly evolving automotive landscape. “The rise of Chinese automakers and new players has dramatically changed the auto industry,” Yonebe told a news conference in Tokyo. “We have to build the capability to fight them by 2030 or we will be defeated.”

Merger Timeline and Governance Structure

Negotiations are expected to conclude in June 2025, with Honda taking a leading role in the holding company’s governance. The company, which has a market capitalization of more than $40 billion, will appoint a majority of its board members. Nissan, which is valued at about $10 billion, will also play a key role in shaping the new organization.

Recent challenges and collaborative efforts

Both automakers face headwinds in key markets. After sharp declines in sales in China and the United States, Nissan recently announced a 20% cut in global production capacity and plans to lay off 9,000 people. Likewise, Honda reported lower-than-expected earnings, citing challenges in China, where local EV brands such as BYD have gained huge market share.

The two companies have been collaborating on electrification and software development since March 2023. In August, their collaboration expanded to include Mitsubishi Motors, underscoring their commitment to shared innovation.

Impact on the industry

The proposed merger reflects a broader trend of consolidation in the auto industry, as companies grapple with rising costs associated with the development of electric vehicles and the need for advanced software integration. Honda and Nissan hope to gain a foothold in the global market by integrating resources and enhancing competitiveness.

While the merger presents significant opportunities, it also raises questions about integration challenges and potential cultural differences between the two storied Japanese brands. Industry analysts will be watching these discussions closely as the two companies work to create a new powerhouse in the automotive space.

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