‘Honda, Nissan, Mitsubishi’ prepares to merge business to challenge the EV market

The news agency reported that “Honda-Nissan,” two automotive giants from Japan, signed an official memorandum of understanding and planned to merge by 2026, hoping to regain their position after being overtaken by electric vehicles such as Tesla and BYD.

On 27 December 2024, Reuters and Bloomberg News reported that “Honda Motor Company” (Honda) and “Nissan Motor Company” (Nissan) signed a Memorandum of Understanding (MOU) that the two companies agreed to consider the merger around June 2025, then a holding company will be established by August 2026 and listed on the stock market. This will make the new company the world’s third-largest carmaker in terms of sales and a major change in the global automotive industry.

Initially, the new company will be mainly led by Honda. Honda is considering appointing a majority of the directors of the newly established holding company. It is also considering a merger with Mitsubishi Motors, of which Nissan is the largest shareholder.

Mitsubishi announced that it would also consider joining the merger discussion, but is expected to decide by the end of January 2025.

The two companies aim to mutually support the development and production of hybrid vehicles (HV) and electric vehicles (EVs), which will be very beneficial to Nissan, which has recently experienced severe business slumps due to its inability to sell hybrid vehicles in North America.

The two companies also plan to integrate R&D and improve production bases to accelerate the efficiency of development and production costs.

The merger between Honda and Nissan will create the third largest automotive group in the world, behind Toyota Motor Group with 11.23 million units in 2023, and Germany’s Volkswagen Group with 9.23 million units sold. Honda and Nissan’s total sales are about 7.4 million units.

In March of this year, Honda and Nissan announced that they would begin considering cooperation in various areas such as the development of electric cars, and in August, they identified specific details of the cooperation, such as standardizing the operating system that controls the vehicle’s computers, and also announced that Mitsubishi would participate in the framework.

The reason why the two companies are negotiating a merger is the increase of new competitors in the U.S. and China. Honda and Nissan are aiming to recapture the number of car sales in the automobile industry.

Analysts view that the merger reflects changes in the Japanese auto industry in the era when China became the center of new technologies, according to data from the quarter-on-quarter in July to September of this year which show that BYD is outpacing Honda and Ford as world’s sixth-largest carmaker. It also reflects the need to make changes to survive in a rapidly changing technology era.