Japanese automotive giants Honda and Nissan have confirmed plans to merge, with Mitsubishi Motors joining as a strategic partner. The landmark merger will create a new holding company, set to be listed on the Tokyo Stock Exchange by August 2026. This combined entity is poised to become the world’s third-largest automaker by sales, trailing only Toyota and Volkswagen.
The companies signed a memorandum of understanding (MoU), signaling a collaborative effort to unify operations under a single corporate structure. Honda President Toshihiro Mibe will lead the initial phase of the partnership. “The rise of Chinese automakers and new players has changed the car industry quite a lot. We have to build up capabilities to fight with them by 2030, otherwise we will be beaten,” Mibe stated during a joint press briefing on Monday.
The merger brings together significant production capacities: Honda’s annual output of 4 million vehicles, Nissan’s 3.4 million units, and Mitsubishi’s contribution of just over 1 million. Combined, the new alliance aims for annual sales of approximately 8.5 million vehicles, a figure that dwarfs competition from smaller automakers while narrowing the gap with Toyota’s 2023 production of 11.5 million cars and Volkswagen’s 9 million.
Addressing Industry Challenges
Both Honda and Nissan have faced mounting challenges, particularly in the race for electric vehicles (EVs). The merger is seen as a strategic move to pool resources, scale up operations, and better compete against rivals like Tesla and emerging Chinese EV manufacturers. Mibe emphasized the urgency of adapting to shifting industry dynamics, remarking, “Current business models are being upended. It is not going to take 10 to 20 years for that to happen; it will come much faster.”
For Nissan, this collaboration offers a chance to stabilize its financial footing. The company reported a staggering 94% drop in profits for the six months ending in September 2024 compared to the same period in 2023. Nissan has also faced production cuts and announced layoffs of 9,000 employees globally.
At the press conference, Nissan CEO Makoto Uchida reflected on the opportunity, saying, “Today marks a pivotal moment. Together, we can create a unique way for [customers] to enjoy cars that neither company could achieve alone.”
Market Reaction
News of the merger positively impacted the stock market, with Honda shares rising by 3.82% to JPY1,276.5 and Nissan’s shares increasing by 1.58% to JPY450. Industry analysts see this as a promising move, not only for the companies involved but also for reshaping the global automotive landscape.
The merger is expected to retain the distinct identities and principles of Honda, Nissan, and Mitsubishi while fostering innovation and growth in a highly competitive market.
