TOKYO – Honda and Nissan are in discussions to merge by 2026, marking a historic shift for Japan’s auto industry, the companies announced on Dec 23. The proposed merger would create the world’s third-largest automobile group by vehicle sales, following Toyota and Volkswagen. The move highlights the increasing pressure from Chinese electric vehicle (EV) manufacturers such as BYD, as well as the global dominance of Tesla.
This merger would combine Honda, Japan’s second-largest automaker, with Nissan, its No. 3, and is expected to reshape the global auto industry in a manner similar to the 2021 merger of Fiat Chrysler Automobiles and PSA, which created Stellantis in a US$52 billion deal. Mitsubishi Motors, where Nissan is the top shareholder, may also join the merger, with a decision expected by the end of January.
Honda’s CEO, Toshihiro Mibe, emphasized the growing competition from Chinese automakers and new industry players, citing the need for stronger capabilities in electrification and autonomous driving to remain competitive by 2030. Both companies aim to achieve combined sales of ¥30 trillion (S$259.2 billion) and an operating profit of more than ¥3 trillion through the merger.
The two companies hope to finalize talks by June 2025 and form a holding company by August 2026, with both companies’ shares being delisted. Honda, which has a market capitalization roughly four times that of Nissan, will control the majority of the new company’s board. If Mitsubishi joins the merger, the combined group’s global sales would exceed eight million cars, surpassing South Korea’s Hyundai and Kia as the third-largest global automaker.
This move comes after both companies expressed interest in cooperating on electrification and software development earlier in 2023, extending their partnership to include Mitsubishi Motors in August.