Honda and Nissan have formally entered talks on a possible merger by summer 2026, a deal that would create the world’s third-largest automaker. They plan to reach a formal merger agreement by June 2025.
The planned merger would bring Japan’s second- and third-largest carmakers under a joint holding company, according to a news release.
“Today marks a pivotal moment,” Nissan CEO Makoto Uchida said announcing the negotiations. “Together, we can create a unique way for (customers) to enjoy cars that neither company could achieve alone.”
Makoto Uchida confirmed that “Honda and Nissan have begun considering a business integration, and will study the creation of significant synergies between the two companies in a wide range of fields. It is significant that Nissan’s partner, Mitsubishi Motors, is also involved in these discussions.”
A third, smaller Japanese automaker and a longtime Nissan partner, Mitsubishi, has also agreed to join the negotiations. If it comes to fruition, “we will be able to deliver even greater value to a wider customer base,” Uchida said in a statement. Mitsubishi will decide by January 2025.
The MoU announced between Nissan and Honda is designed to enhance their global competitiveness, enabling both companies to continue delivering more innovative and appealing products and services to customers worldwide.
Adapting to a changing automotive landscape
The CEOs of Honda, Nissan, and Mitsubishi held a joint press conference in Tokyo, where Honda CEO Toshihiro Mibe explained that the talks were driven by the need to stay competitive in a rapidly changing business environment.
Facing intense global competition in the EV market from Tesla and China’s BYD, Japanese automakers are working to cut costs and catch up in the electric vehicle market.
“The rise of Chinese automakers and new players has changed the car industry quite a lot,” Mibe said, pointing to trends like electrification and autonomous driving. “We have to build up capabilities to fight with them by 2030, otherwise we’ll be beaten.”
“In an era of change in the automotive industry, the study between Nissan and Honda about a business integration will accelerate synergy maximization effects, bringing high value also to the collaborative businesses with Mitsubishi Motors,” Mitsubishi Motors Director, Representative Executive Officer, and President and CEO Takao Kato said.
Honda Director and Representative Executive Officer Toshihiro Mibe expressed hope that “Mitsubishi Motors’ participation in the business integration discussions of Nissan and Honda will lead to further social change, and that we will be able to become a leading company in creating new value in mobility through business integration.”
Financial targets and timeline
The companies aim to achieve combined sales of 30 trillion yen ($191 billion) and an operating profit exceeding 3 trillion yen through the potential merger.
Honda and Nissan aim to finalize talks by June 2025 and establish a holding company by August 2026, with shares of both companies delisted. Honda, with a market cap four times larger than Nissan’s, will appoint the majority of the new board.
If the merger proceeds, it could create a $50 billion powerhouse, positioning Honda, Nissan, and Mitsubishi to better compete with automotive giants such as Toyota and Volkswagen. Currently, Toyota is the world’s largest automaker by sales, followed by Volkswagen. A merger between Honda and Nissan could surpass South Korea’s Hyundai in scale.
The two companies aim to achieve combined sales of 30 trillion yen ($191 billion) and an operating profit of over 3 trillion yen through the proposed merger.
Current performance and market comparison
The three companies already collaborate on vehicle intelligence and electrification, working toward carbon neutrality and a zero-traffic-accident society.
In 2023, Honda produced nearly 4.2 million cars and sold almost 4 million globally, while Nissan produced and sold 3.4 million. In comparison, Toyota and General Motors sold 10 million and 6.2 million vehicles, respectively.
“We have come to the realization that in order for both parties to be leaders in this mobility transformation, it is necessary to make a more bold change than a collaboration in specific areas,” Mibe said.
The merger represents a significant step toward ensuring that the two companies remain competitive in an increasingly complex and fast-changing automotive landscape.