Tokyo, Dec 23 – Honda (7267.T) and Nissan (7201.T) announced plans on Monday to explore a merger, a move that could create the world’s third-largest automaker amid growing challenges in the industry.
The companies aim to establish a joint holding company with projected annual sales of 30 trillion yen ($191 billion) and operating profits exceeding 3 trillion yen. Talks are expected to conclude by June 2025, with the new entity set to launch in August 2026, at which point both companies’ shares would be delisted.
If successful, the merger would rank the alliance behind Toyota (7203.T) and Volkswagen (VOWG_p.DE) in global vehicle sales, overtaking the Hyundai-Kia group. The move comes as automakers face increasing competition from Tesla (TSLA.O) and Chinese EV makers such as BYD (002594.SZ).
Honda, Japan’s second-largest automaker by market value, is worth over $40 billion, while Nissan is valued at around $10 billion. Honda will hold a majority of the new board positions, the company said.
The integration could mark the largest industry restructuring since Fiat Chrysler and PSA merged in 2021 to form Stellantis (STLAM.MI). Including Mitsubishi Motors in the alliance would push combined global sales to over 8 million vehicles annually.
Both companies have been expanding their partnership over the past year, agreeing to collaborate on electrification and software development. Declining sales in China and the United States have prompted cost-cutting measures, with Nissan recently announcing plans to cut 9,000 jobs and reduce global production by 20%. Honda has also reported lower earnings due to challenges in China.
Former Nissan Chairman Carlos Ghosn expressed doubts about the alliance during an online press conference, calling the two automakers “not complementary.” Ghosn, wanted in Japan for financial misconduct, fled to Lebanon after his arrest in 2018.
French automaker Renault (RENA.PA), Nissan’s largest shareholder, has indicated it is open to the potential deal and is evaluating its implications. Separately, Foxconn (2317.TW) approached Nissan for a partnership in EV manufacturing but was turned down, according to sources.
Shares of Honda rose 3.8%, Nissan gained 1.6%, and Mitsubishi Motors climbed 5.3% following the news. The Nikkei index (.N225) also closed 1.2% higher.
