Honda-Nissan Begin Talks Aiming for Merger by June Next Year...Holding Company CEO to Be from Honda Side

Honda and Nissan, the second and third largest automakers in Japan, have entered full-scale merger talks and plan to complete the process by June next year. Upon completion, the merged entity will leap to become the world's third-largest automotive group, surpassing Hyundai Motor Group.

Reuters Yonhap News

According to local media including TBS on the 23rd, Honda and Nissan signed a basic agreement for merger discussions on that day. Immediately afterward, the management teams of both companies are scheduled to officially announce the merger plans and background at a press conference in the afternoon. It is also reported that Mitsubishi Motors, whose largest shareholder is Nissan, will participate in this event.

Honda and Nissan aim to finalize the merger direction by January next year and complete the merger work by June. As previously reported, they plan to establish a holding company under which each brand will operate independently. A source explained that the holding company will be listed on the Tokyo Stock Exchange shortly thereafter. The president of the holding company will be appointed from Honda’s side. Discussions are underway for Honda to nominate the majority of the board directors, indicating that Honda is expected to hold overall leadership in the merger.

If the integration including Mitsubishi is completed, an ‘automotive giant’ with annual sales exceeding 8 million units will be created. This surpasses the sales volume of Hyundai Motor and Kia, which ranked third globally last year with 7.3 million units. Honda and Nissan’s global sales last year were 3.98 million and 3.37 million units respectively, while Mitsubishi recorded 780,000 units.

This merger negotiation is particularly notable as it takes place amid the rapid global shift to electric vehicles. With the industry’s technological landscape significantly changing due to electric vehicles, autonomous driving, and software development led by U.S. Tesla and China’s BYD, the merger is interpreted as a move to share technology investment costs and improve management efficiency through integration. Moreover, Japanese automakers are currently being pressured by Chinese electric vehicle companies aggressively competing with low prices in key markets.

However, local media pointed out that there are many challenges. Honda and Nissan’s main markets?Japan, the U.S., and China?largely overlap, making supply chain restructuring and factory consolidation inevitable to realize the benefits of management integration. From Nissan’s side, there are disheartened voices describing the merger as “practically an absorption by Honda.” TBS noted that even if merger talks intensify, there are concerns that the deal’s success cannot be guaranteed until the very end.