Vehicles are offered for sale at a Nissan dealership on December 18, 2024 in Libertyville, Illinois. Getty Images
Japanese automakers Nissan and Honda announced on Monday that they have entered into official talks to merge and create the world’s third-largest automaker by sales. Honda CEO Toshihiro Mibe said that the companies need to have greater scale to compete in the development of new technologies in electric vehicles and intelligent driving, and that the business integration would give them an “edge that will not be possible under the current collaboration framework.”
A holding company would be formed as the parent company of both Honda and Nissan, listed on the Tokyo Stock Exchange. Honda would nominate most of the integrated entity’s board members. The merged group has the potential to deliver revenue of 30 trillion yen ($191.4 billion) and operating profit of over 3 trillion yen, according to Mibe.
Discussions are set to conclude in June 2025. Mibe added that if approved, the integration would be a mid to long-term project that is currently not expected to show visible progress until 2030 and beyond.
Nissan’s strategic partner Mitsubishi has been offered the chance to join the new group and will take a decision by the end of January 2025.
The companies are grappling with intense global competition in the EV market from the likes of Tesla and China’s BYD. The high cost of the EV transition for legacy companies has long been expected to drive industry consolidation.
Nissan has been struggling in the market, having cut 9,000 jobs and reduced global production capacity by a fifth in its most recent quarterly results. Some of Honda’s shareholders may feel that the deal would represent Honda supporting Nissan, but Mibe noted that the merger is “based on the assumption that Nissan completes its turnaround action.”
The proposal was first reported by Japan’s Nikkei newspaper on December 17, with Nissan shares spiking following the initial report of a merger. The potential tie-up is seen as a result of financial underperformance at the company and the restructuring of its longstanding partnership with France’s Renault.