Honda and Nissan announced on Monday that they have begun negotiations for a potential merger that, if finalized by 2026, could establish the world’s third-largest automaker by sales, behind Toyota and Volkswagen.
The agreement envisions the creation of a new entity with a combined revenue of approximately ¥30 trillion ($191 billion) and an operating profit exceeding ¥3 trillion. The plan includes forming a holding company by 2026, delisting Honda and Nissan shares, and granting Honda the majority of seats on the board of directors.
Honda CEO Toshihiro Mibe emphasized that the automotive industry is undergoing a significant transformation, driven by the growing influence of Chinese manufacturers and the rapid advancement of electrification and autonomous driving technologies. “Competition is changing radically, and we must prepare to face it by 2030,” Mibe stated.
The merger represents a strategic opportunity, particularly for Nissan, which recently announced a restructuring plan involving 9,000 job cuts and a 20% reduction in global production capacity. Honda, meanwhile, has also faced underwhelming results due to declining sales in China, although its motorcycle and hybrid vehicle divisions have managed to maintain a relatively stable financial footing.
Not everyone is convinced of the merger’s potential benefits. Carlos Ghosn, former chairman of Nissan, expressed skepticism, arguing that the two companies are not complementary and that the alliance might fail to deliver the expected results. Renault, Nissan’s largest shareholder, has taken a more ambiguous stance. The French automaker stated that it would discuss all potential options with Nissan but has not ruled out a possible merger with Honda.
The merger announcement has positively impacted the stock prices of the three companies involved: Honda shares rose by 3.8%, Nissan’s by 1.6%, and Mitsubishi Motors saw a 5.3% gain. Markets also reacted optimistically, with the Nikkei 225 index closing 1.2% higher.
