TOKYO, JAPAN: Honda and Nissan signed a memorandum of understanding (MOU) on Dec 24, announcing plans to explore a potential merger to form a joint holding company by 2026.
The move would create the world’s third-largest automaker by vehicle sales, behind Toyota and Volkswagen, according to Malay Mail.
The companies stated that their goal was to become a world-class mobility company, targeting sales revenue of more than 30 trillion yen (S$258.81 billion) and operating profit exceeding 3 trillion yen.
Talks are expected to conclude by June 2025, with plans to list the new joint holding company on the Tokyo Stock Exchange’s Prime Market in August 2026.
Honda and Nissan will become wholly owned subsidiaries of the holding company and will be delisted, but shareholders will still be able to trade the new holding company’s shares on the exchange.
The schedule is not final and could change based on discussions between the companies.
At the time of the share transfer, Honda is expected to nominate the majority of internal and external directors for the joint holding company, including the president and representative director or executive officer, who will be selected from Honda’s nominees.
The merger of Honda and Nissan would be the largest shift in the global auto industry since Fiat Chrysler and PSA merged in 2021 to form Stellantis in a US$52 billion (S$70.55 billion) deal. With Mitsubishi Motors included, the combined group would exceed 8 million cars in global sales, placing the Japanese group ahead of South Korea’s Hyundai and Kia, currently ranked third, as reported by Malay Mail.
Makoto Uchida, Nissan Director, President, CEO and Representative Executive Officer, said:
“If realized, I believe that by uniting the strengths of both companies, we can deliver unparalleled value to customers worldwide who appreciate our respective brands. Together, we can create a unique way for them to enjoy cars that neither company could achieve alone.”
Toshihiro Mibe, Honda Director and Representative Executive Officer, added:
“We are still at the stage of starting our review, and we have not decided on a business integration yet, but in order to find a direction for the possibility of business integration by the end of January 2025, we strive to be the one and only leading company that creates new mobility value through chemical reaction that can only be driven through synthesis of the two teams.”
Honda, valued at over US$40 billion (S$54.27 billion), is Japan’s second-largest automaker, while Nissan, worth about US$10 billion (S$13.57 billion), ranks third.
Both companies have faced challenges in major markets like China, where local brands such as BYD have gained ground with electric and hybrid vehicles.
Honda recently reported weaker-than-expected earnings due to declining sales in China, while Nissan announced plans to cut 9,000 jobs and reduce production capacity by 20 per cent after a slump in sales in China and the US.
Honda and Nissan have been looking for ways to strengthen their partnership, including the possibility of a merger, according to a recent report from Reuters.
In March, the companies said they were considering joint efforts in electrification and software development. By August, the partnership expanded to include Mitsubishi Motors for joint research efforts.
Former Nissan chairman Carlos Ghosn, speaking at a separate online press conference on Monday, expressed doubts about the success of the Honda-Nissan alliance, stating the two companies were not complementary.
Nissan’s largest shareholder, French automaker Renault, is reportedly open to the deal and examining all the implications of the tie-up, according to sources.
Meanwhile, Taiwan’s Foxconn had previously approached Nissan about a potential bid to support its electric vehicle ambitions. However, the talks stalled after Foxconn’s delegation met with Renault representatives in France, according to Bloomberg News.
On Monday, Honda’s shares closed 3.8 per cent higher, Nissan’s increased by 1.6 per cent, and Mitsubishi Motors saw a 5.3 per cent rise. The Nikkei benchmark index closed up 1.2 per cent. /TISG