In a landmark move set to reshape Japan’s auto industry, Honda and Nissan have announced plans to merge under a single holding company by 2026. This bold step aims to counter the mounting challenge posed by Chinese electric vehicle (EV) manufacturers and global EV leaders like Tesla, highlighting the urgent need for scale and innovation in a rapidly changing automotive landscape.
A Strategic Pivot for Survival
The combined entity would become the world’s third-largest automaker by vehicle sales, following Toyota and Volkswagen. The partnership offers a lifeline for both companies to share resources and boost competitiveness amidst the rise of nimble Chinese automakers like BYD, as well as escalating global electrification and software integration trends.
Honda CEO Toshihiro Mibe emphasized the need to prepare for these challenges, stating, “We have to build up capabilities to fight with them by 2030; otherwise, we’ll be beaten.” Echoing this urgency, Nissan CEO Makoto Uchida stressed that the merger aims to leverage the distinct strengths of each company to deliver unparalleled customer value.
Framework and Timeline
The merger will involve integrating research and development, standardizing vehicle platforms, streamlining manufacturing processes, and optimizing supply chains. The new holding company, yet unnamed, is expected to officially launch by August 2026. Both companies will delist from the Tokyo Stock Exchange, with Honda assuming a majority role in the management structure.
A steering committee will finalize the merger framework by June 2025, while shareholders of both companies are set to vote on the agreement in April 2026. If approved, the merger would target combined sales of ¥30 trillion ($191 billion) and an operating profit exceeding ¥3 trillion annually.
Mitsubishi’s Role and Renault’s Reaction
Mitsubishi Motors, in which Nissan is the top shareholder, is also exploring its participation in the merger. A decision is expected by January 2025, potentially elevating the combined group’s global sales to over 8 million vehicles annually, rivaling Hyundai and Kia.
Renault, Nissan’s largest shareholder, has acknowledged the merger talks and expressed openness to exploring options. Meanwhile, Nissan recently reduced its stake in Mitsubishi and announced job cuts to stabilize operations.
A Bold Gamble with Mixed Sentiments
This merger mirrors past industry reshuffles, such as the Fiat Chrysler and PSA merger that created Stellantis in 2021. However, the Honda-Nissan alliance is not without its critics. Former Nissan chairman Carlos Ghosn, speaking from exile, questioned the complementary nature of the two automakers, casting doubt on the potential synergy.
Despite the skepticism, both companies remain optimistic. Mibe assured stakeholders that this is not a bailout of Nissan but a strategic collaboration to harness mutual strengths. In addition, Honda will maintain its ongoing partnerships with General Motors, while Nissan continues its project-based collaborations with Renault.
The Road Ahead
The proposed merger is a response to intensifying global competition, particularly in the EV sector, where traditional automakers are struggling to match the rapid advancements of Chinese and American rivals. If the merger succeeds, it could herald a new era of collaboration and innovation, reshaping the automotive industry as we know it.
Honda and Nissan are at a pivotal crossroads, striving to create a future where they stand not as separate entities but as a united force capable of leading the next wave of automotive innovation.