Honda and Nissan announced plans to merge on Monday, forming a new automotive giant that would rank as the third-largest automaker globally by sales, trailing only Toyota and Volkswagen.
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The companies signed a memorandum of understanding outlining the merger plans, with Mitsubishi Motors also considering joining the partnership. A decision on Mitsubishi’s participation is expected by the end of January.
The proposed merger aims to create a joint holding company, enabling the combined entity to effectively compete with rising electric vehicle (EV) manufacturers like Tesla and China’s BYD. This move is particularly crucial for Nissan, which has been struggling with declining profitability, reporting a 90% year-over-year drop in net earnings in mid-2024 and announcing significant workforce reductions.
Honda President Toshihiro Mibe emphasized the strategic rationale behind the merger, stating, “Creation of new mobility value by bringing together the resources including knowledge, talents, and technologies that Honda and Nissan have been developing over the long years is essential to overcome challenging environmental shifts that the auto industry is facing.”
The merger is expected to be finalized by August 2026, with Honda initially leading the management of the combined entity.
Nissan CEO Makoto Uchida expressed optimism about the partnership, stating, “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.”
However, former Nissan CEO Carlos Ghosn criticized the merger as a “desperate move” in an interview with Bloomberg, citing limited potential synergies between the two companies. Ghosn’s comments come amidst ongoing turmoil at Nissan following his 2018 arrest on financial misconduct charges.
