Honda and Nissan announce merger talks to create world’s third-largest global automaker

Key Points

• Honda and Nissan have begun talks to merge by summer 2026, with Mitsubishi invited to join.
• The merger could result in a $50 billion entity.
• If successful, the merged entity would rank as the world’s third-largest automaker

Nissan and Honda have signed a memorandum of understanding (MoU) to explore a business integration that could reshape the future of global mobility. The two companies have officially entered talks on a potential merger that could result in the formation of the world’s third-largest automaker.

“Today marks a pivotal moment,” Nissan CEO Makoto Uchida said in a statement announcing the negotiations. “Together, we can create a unique way for (customers) to enjoy cars that neither company could achieve alone.”

The proposed merger would unite the two Japanese automotive giants under a joint holding company, with Mitsubishi Motors (already in an alliance with Nissan) also involved in the talks. Together, the three companies could form a powerhouse capable of challenging industry leaders like Toyota and Volkswagen.

Focus on Mobility Innovation

This collaboration is designed to help both companies tackle the evolving challenges of the automotive industry, including the need for competitive innovation and achieving a carbon-neutral and zero-traffic-fatality society.

“We are committed to creating new mobility value by leveraging the resources, talents, and technologies that both Nissan and Honda have developed over decades. This integration will help us tackle the challenges facing the auto industry, particularly in terms of sustainability,” Honda’s CEO Toshihiro Mibe remarked at the joint press conference in Tokyo on December 23, 2024.

The proposed integration offers significant benefits. By forming a joint holding company, Nissan and Honda aim to integrate their R&D functions more effectively, reducing costs while accelerating the development of next-generation vehicle platforms. Through joint research on Software-Defined Vehicles (SDVs), both companies plan to unlock technological breakthroughs in areas such as artificial intelligence (AI), connectivity, and electrification.

“We have come to the realization that in order for both parties to be leaders in this mobility transformation, it is necessary to make a more bold change than a collaboration in specific areas,” Mibe said.

Merger to bolster EV transition and compete with industry disruptors

The discussions come at a critical time as the automotive industry undergoes a rapid shift toward electric vehicles (EVs). The potential merger would provide the resources and synergies necessary for both Honda and Nissan to navigate this transformation and stay competitive against leading disruptors like Tesla and China’s BYD.

The Japanese companies are facing increasing pressure from these emerging giants and recognize the urgent need to expand their EV portfolios. With BYD and Tesla already holding significant advantages in the EV market, this merger represents a crucial step for both Honda and Nissan to secure their place in the evolving automotive landscape and meet the growing demand for sustainable transportation solutions.

Honda launched its first all-electric SUV, the Prologue, in early 2024 to better compete in the rapidly growing EV market. In its first three months ending September 30, the mid-sized SUV sold around 13,000 units, quickly surpassing many electric competitors in the U.S. Honda SUV offers customers an affordable alternative to Tesla at a starting price of $47,400.

Honda will unveil two prototype models of the Honda 0 Series EV at CES 2025 in Las Vegas, with plans for a global launch in 2026. Developed with the “Thin, Light, and Wise” approach, the Honda 0 Series redefines the conventional bulky EV design.

Business integration: What’s next?

Nissan and Honda have set a timeline for the merger discussions, with a definitive agreement expected to be finalized by June 2025. The joint holding company is slated for establishment in August 2026, with both Nissan and Honda becoming wholly-owned subsidiaries of the new entity. The merged group will be listed on the Tokyo Stock Exchange, with shares of the new holding company available for trade.

“In an era of change in the automotive industry, the study between Nissan and Honda about a business integration will accelerate synergy maximization effects, bringing high value also to the collaborative businesses with Mitsubishi Motors,” Mitsubishi President and CEO Takao Kato noted, adding that they will explore the best use of each company’s strengths during the merger talks.

The path to integration will involve several key steps. Both Nissan and Honda will set up an integration preparatory committee to discuss organizational structures, potential synergies, and operational efficiencies. The companies are also examining the financial implications of their partnership, including the share transfer ratio, which will be determined through due diligence and third-party evaluations.

The official timeline for the integration includes:

• December 23, 2024: Board resolutions and signing of the MOU
• June 2025: Execution of the definitive agreement, including the share transfer plan
• April 2026: Extraordinary shareholders’ meetings to approve the share transfer
• August 2026: The new joint holding company will be established, and both Nissan and Honda will be delisted from the Tokyo Stock Exchange.

At the time of integration, the joint holding company will operate with a management structure influenced primarily by Honda, with the company nominating a majority of internal and external directors.

Financial strengths

In 2023, Honda produced 4 million vehicles while Nissan made around 3.4 million. Mitsubishi Motors made just over 1 million. With this alliance, the three companies could reach a combined production volume of about 8 million vehicles annually. This would significantly enhance their ability to compete with the global giants, particularly Toyota, which produced 11.5 million vehicles in 2023, and Volkswagen, the second-largest automaker.

Honda’s impressive operating profit of 1.382 trillion yen for the fiscal year 2023-2024, compared to Nissan’s 568.7 billion yen, will provide substantial financial strength to the merger that could result in a $50 billion entity based on the combined market value of the companies. The merger is expected to generate a combined annual revenue of 30 trillion yen ($191.4 billion) and operating profits exceeding 3 trillion yen.

Honda, founded in 1948 by Soichiro Honda, began by modifying generator engines for bicycles before moving into automobiles with the T360 mini truck in 1963 and the S500 sports car. By 1970, it introduced the N600 sedan to the U.S. market. Nissan’s history stretches back further. Founded in 1911 as Kwaishinsha Motor Car Works, the company produced Japan’s first mass-produced vehicle, the Datsun Type 15, in 1914. It started producing cars, trucks, and vans by the late 1930s.

The goal of the merger talks is to combine Nissan and Honda’s strengths by sharing resources and technologies while maintaining their unique identities to better compete with global giants in the EV market.

Top 10 car manufacturers globally for 2024

The following are the top 10 car manufacturers globally for 2024, based on cumulative sales as of October 2024, including the percentage change in their year-to-date volume. This data is sourced from the Focus2Move team, which tracks global car registrations.