Honda and Nissan have announced plans to merge by 2026, signaling a transformative shift for Japan’s automotive industry amid rising competition from Chinese electric vehicle (EV) makers.
This merger, set to create the world’s third-largest automaker by sales after Toyota and Volkswagen, reflects the growing threat posed by Tesla and BYD.
Honda and Nissan will create a new holding company. There will be two subsidiaries for Honda and Nissan – under the holding company. Share holding of the holding company will be decided after the third-party evaluation of the business.
Honda, Japan’s second-largest automaker, and Nissan, its third, are adapting to industry trends like electrification and autonomous driving, with the combined entity targeting sales of 30 trillion yen ($191 billion) and an operating profit exceeding 3 trillion yen, Reuters news report said.
“This is a necessary step to face the intensified global competition and technological shift,” Honda CEO Toshihiro Mibe stated during a joint press conference in Tokyo.
Smaller ally Mitsubishi Motors, partially owned by Nissan, is weighing its participation in the deal and plans to decide by January.
The merger aims to pool resources for electrification, software development, and global market presence.
Both automakers have struggled in the Chinese market, where local manufacturers lead with innovative EVs and hybrids.
Nissan plans significant job cuts and capacity reductions, while Honda relies on stable revenue from motorcycles and hybrids to support its strategy.
Renault, Nissan’s largest shareholder, expressed openness to the tie-up, potentially adding further complexity to the alliance. Meanwhile, Taiwan’s Foxconn, which approached Nissan with an EV manufacturing proposal, was reportedly turned away.
The announcement boosted stocks: Honda gained 3.8 percent, Nissan rose 1.6 percent, and Mitsubishi Motors climbed 5.3 percent.
While the merger signals an aggressive pivot to remain competitive, critics, including former Nissan chairman Carlos Ghosn, question its feasibility due to differences in business models and cultures. The companies, however, are optimistic about concluding talks by mid-2025 and launching the unified entity by August 2026.
Baburajan Kizhakedath