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Honda and Nissan, two of Japan’s most prominent automotive giants, were preparing to announce the beginning of discussions on a potential merger this Monday. The move comes as both companies seek to position themselves more competitively against the rapidly advancing Chinese electric vehicle manufacturers and Tesla.
The merger aims to streamline efforts in accelerating their transition into the electric vehicle market, ensuring they are not left behind in the global race for innovation.
Should the merger come to fruition, Honda and Nissan’s combined efforts would create the world’s third-largest automotive force, poised to drive forward the development of electric vehicles and self-driving technologies. The partnership would not only allow for enhanced innovation but also offer critical support to Nissan, whose struggles in recent times have hindered its competitive edge.
Though no official details have been shared by Honda or Nissan, numerous Japanese media reports suggest that the two companies are on the verge of signing a memorandum of understanding on Monday afternoon. This agreement is anticipated to pave the way for their long-awaited collaboration, setting the stage for future developments in the electric and autonomous vehicle markets.
In what could reshape Japan’s automotive landscape, Honda and Nissan, Japan’s number two and three car manufacturers behind Toyota, are working toward finalizing a merger deal by June 2025, according to several media reports.
As Honda and Nissan prepare for board meetings ahead of Monday’s announcement, Mitsubishi Motors, which may join the new holding company early next year, is also expected to play a significant role in the upcoming developments.
According to Kyodo News, the presidents of Honda, Nissan, and Mitsubishi Motors communicated their plan to begin merger negotiations to Japan’s industry and transport ministries earlier this morning. This announcement signals the first official step in what could be a groundbreaking shift for the Japanese automotive sector.
Honda and Nissan’s partnership could include a manufacturing tie-up where they build vehicles at each other’s plants, Kyodo said, citing sources close to the matter. Lacklustre consumer spending and stiff competition in several markets is making life hard for many automakers.
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Business has been especially tough for foreign brands in China, where electric vehicle manufacturers such as BYD are leading the way as demand grows for less polluting vehicles. China overtook Japan as the biggest vehicle exporter last year, helped by government support for EVs.
“We hope Japanese companies will take steps to respond to these changes and take measures to survive and win amid international competition,” top government spokesman Yoshimasa Hayashi said Monday.
He declined to comment on the merger reports but highlighted the “importance of strengthening competitiveness in areas such as… batteries and in-vehicle software”.
Debt-laden Nissan last month announced thousands of job cuts as it reported a 93 percent plunge in first-half net profit, making a merger with Honda welcome news.
But Taiwanese electronics manufacturer Foxconn has also reportedly sensed an opportunity.
Foxconn, which builds devices for tech companies including Apple’s iPhones, first unsuccessfully approached Nissan with a bid to acquire a majority stake, according to Bloomberg.
According to a report from a Taiwanese media outlet, Jun Seki, the Foxconn executive and former Nissan executive, recently traveled to France with a proposal for Renault: to sell its 35 percent stake in Nissan. However, the pursuit of this acquisition appears to have stalled, with later reports indicating that Foxconn has paused its efforts.
This comes on the heels of a strategic agreement reached earlier this year between Honda and Nissan, aimed at collaborating on software, EV components, and other innovative technologies to advance their positions in the rapidly evolving automotive industry.
By August, Mitsubishi Motors, part of the Nissan family with the latter holding a majority stake, joined the strategic partnership between Honda and Nissan.
This collaboration represents a new chapter for Nissan, which has spent much of the past decade navigating through a storm of controversies. Among the most sensational events was the 2018 arrest of Carlos Ghosn, the company’s former leader. Ghosn’s subsequent escape from Japan—fleeing hidden in a music equipment box after jumping bail—added to the already turbulent period in the company’s history.
Kyodo reported that, as part of the merger negotiations, Honda has laid down a stringent condition: Nissan must demonstrate a “V-shaped recovery” in its performance. This requirement highlights the necessity for a robust financial rebound from Nissan, reflecting Honda’s cautious optimism and strategic need for solid stability before taking the next step in their partnership.
