Japanese automotive giants Honda and Nissan have confirmed they are engaged in discussions about a historic mega-merger, possibly involving Mitsubishi Motors. The two companies have signed a memorandum of understand (MOU) to explore this potential business integration through the establishment of a joint holding company.
The talks signal ambitious plans for the firms, which aim to solidify their position as global competitors against surging threats from the electric vehicle market, especially from Chinese manufacturers. Should the merger go through, it is projected to create the third-largest carmaker globally, right after Toyota and Volkswagen, marking the most significant consolidation the automotive industry has seen since the formation of Stellantis from Fiat Chrysler and PSA.
The prospective merger is set to conclude by August 2026, with developments expected to take place quickly. The partnership is anticipated to underpin technological collaboration and resource sharing, facilitating improvements to compete more effectively and reposition themselves within the changing auto industry.
Currently, Honda is Japan's second-largest car manufacturer, with Nissan close behind at third. Challenges for both companies have been mounting, particularly from rising competition, which was exacerbated by Nissan’s scandal involving former chairman Carlos Ghosn, who was arrested on fraud charges back in 2018. Meanwhile, Honda has struggled to maintain its market share as electric vehicles gain traction among consumers.
CEO Makoto Uchida of Nissan expressed optimism about the potential merger, emphasizing the value of combining their strengths to deliver unparalleled car experiences. “By uniting the strengths of both companies, we can deliver unparalleled value to customers worldwide who appreciate our respective brands,” Uchida stated. This sentiment is echoed by Honda's CEO Toshihiro Mibe, who highlighted the importance of both firms pooling their resources, stating, “Creation of new mobility value by bringing together the resources including knowledge, talents, and technologies is necessary to overcome challenging environmental shifts.”
The undertaking would lead to the integration of their management resources and create efficiencies to respond to market changes more adeptly. It would facilitate standardized vehicle platforms across various segments, enabling improved cost management and product development. It is also aimed at enhancing the companies’ ability to meet diverse customer needs across global markets.
The tentative agreement also discusses Mitsubishi Motors’ involvement. CEO Takao Kato of Mitsubishi remarked, “The study between Nissan and Honda about business integration will accelerate synergy maximization effects, bringing high value to the collaborative businesses with Mitsubishi Motors.” This suggests, if finalized, the merger could yield substantial benefits not just for Honda and Nissan but also for Mitsubishi’s electric vehicle advancements.
Despite the potential upsides, concerns linger among industry analysts and unionists about the merger's impact on employment. Notably, discussions of significant job losses have surfaced, with labor unions maintaining vigilance over developments. Steve Bush, national officer for automotive at Unite, has expressed concerns about the security of Nissan’s UK workforce, which includes 7,000 positions tied to the company's Sunderland plant—a facility integral to Nissan’s production output.
Compounding issues for Nissan and Honda is the rapidly changing automotive market, where they both have seen sales declines, particularly within China. Last month, Nissan indicated its severe financial outlook, slashing its annual profit forecast significantly, targeting approximately 150 billion yen compared to earlier projections of 500 billion yen. Challenges from international markets, especially the competition from EV makers propelled by government backing, are major factors leading to increased scrutiny of their positions.
Some stakeholders, including Carlos Ghosn—who previously led Nissan through tumultuous shifts—have questioned the motives behind the merger talks, characterizing them as indicative of desperation from Nissan’s side. “I don’t see anything obvious in this partnership or this alliance,” he remarked from exile, implying skepticism about the partnership's potential for viability and growth.
With the automotive industry reaching what some are calling its most transformative period yet, Honda and Nissan’s deliberations represent not just strategic maneuvering, but also the need for survival and adaptability as electric vehicles and changing consumer preferences reshape the automotive terrain. The coming months will be pivotal as both companies clarify their pathways, and aim to secure their shared future amid growing challenges.
