Automotive

Honda and Nissan, merger talks begin. It will be the world's third automotive giant

Exploratory deal: finalisation in June. From August 2026 the new holding company listed on the Tokyo Stock Exchange. Mitsubishi decides in January

23 December 2024

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The Honda-Nissan deal roadmap
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Honda and Nissan confirm the merger plan that will lead to the creation of the world's third largest automotive group, in an attempt to counter the dominance of electric vehicles produced by Chinese competitors, and in view of the application of new duties with the advent of the second Trump administration in the United States. In a joint statement, the second and third Japanese carmakers announced that they had signed a memorandum of understanding that will lead to the establishment of a holding company in which Nissan's existing investee Mitsubishi Motors could also be included, with a market value of $58 billion.

Consolidation would create the third-largest automotive group in the world by vehicle sales after Toyota and Volkswagen, all while traditional carmakers face the growing challenges of electric with Tesla and Chinese rivals.

Honda will appoint the majority of the holding company's board of directors, including its own chief executive. The integration of the two historic Japanese brands would mark the biggest reorganisation of the global automotive industry since Fiat Chrysler Automobiles and Psa merged in 2021 to create Stellantis in a $52 billion deal.

Il futuro è dell'automobile sapiens

The two groups will set up a committee to work on the integration and, based on the committee's discussions and the results of the due diligence, examine and analyse the possibility of more specific synergies. "Nissan and Honda can aim to become a world-class mobility company with a turnover of more than 30 trillion yen and an operating profit of more than 3 trillion yen," they report.

The Honda-Nissan Agreement Roadmap

The timetable for the transaction includes the execution of a definitive business integration agreement in June 2025, shareholder meetings in April 2026, and the delisting of Nissan and Honda from the Tokyo Stock Exchange in summer 2026. The new entity's shares are expected to be listed on the Tokyo Stock Exchange in August 2026.

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Negotiations will be concluded by June, the two Japanese automotive bigwigs have announced, and thanks to the agreement they will be able to share substantial research and development costs through the integration of common components, optimising production costs. Already in March, the two carmakers had agreed to launch a feasibility study for a strategic partnership for the assembly of electric vehicles, including the development of related software technologies, to reduce costs and improve competitiveness.

Last November, Honda had revised down its profit forecast for the current fiscal year to ¥950 billion (€5.9 billion), down 14.2 per cent year-on-year, due to slowing sales in China.

Simultaneously, Nissan announced a plan to cut 9,000 jobs and reduce global production capacity by 20 per cent, citing difficulties in its US and Chinese operations. Electric vehicles are considered one of the most critical segments for growth in the global automotive industry, but both Honda and Nissan, along with other Japanese automakers, are chasing major competitors, including China's BYD and the US-based Tesla.

Electric vehicles and plug-in hybrids in China

In China, electric vehicles and plug-in hybrids account for around 50 per cent of new car sales, the highest percentage among major economies, with market leader BYD selling around 3.76 million vehicles from January to November this year - a 40 per cent increase over 2023. In contrast, Honda's sales in China fell by 31% to 740,000 units, while Nissan recorded an 11% drop to 620,000 units. According to industry analysts, the two Japanese carmakers will see their full-year registrations in China fall by about half compared to 2019.

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Globally, combined sales from the merger of Honda and Nissan, with Mitsubishi's presence to be defined by next January, amounted to around 8 million vehicles in 2023, behind Toyota and Volkswagen.

Taiwan's Foxconn, which is looking to expand its fledgling electric vehicle manufacturing business, approached Nissan for an offer, but the Japanese company turned it down. Foxconn decided to suspend the approach after sending a delegation to meet Renault in France.