TOKYO: Honda and Nissan agreed to explore a merger and set up a joint holding company, they said on Monday (Dec 23), which would create the world’s third-largest automaker and signals a massive shift in an industry under tremendous upheaval.
The two companies would aim for combined sales of 30 trillion yen (US$191 billion) and operating profit of more than 3 trillion yen through the potential merger, they said in a statement.
They aimed to wrap up talks around June 2025 and then set up a holding company by August 2026, at which time both companies’ shares would be delisted.
The consolidation would create the world’s third-largest auto group by vehicle sales after Toyota and Volkswagen as legacy carmakers face growing challenges from Tesla and Chinese rivals.
Honda, Japan’s second-biggest automaker after Toyota, has a market capitalisation of more than US$40 billion, while third-ranked Nissan is valued at about US$10 billion.
Honda will appoint the majority of the holding company’s board, it said.
The integration of the two storied Japanese brands would mark the biggest reshaping in the global auto industry since Fiat Chrysler Automobiles and PSA merged in 2021 to create Stellantis in a US$52 billion deal.
Combining with Mitsubishi Motors would take the Japanese group’s global sales to more than 8 million cars. The current No. 3 group is South Korea’s Hyundai and Kia.
Honda and Nissan have been exploring ways to bolster their partnership, including a merger, Reuters reported last week.
The two companies said in March they were considering cooperation on electrification and software development. They agreed to conduct joint research and widened the collaboration to Mitsubishi Motors in August.
Last month, Nissan announced a plan to cut 9,000 jobs and 20 per cent of its global production capacity after sales plunged in the key China and US markets. Honda also reported worse-than-expected earnings due to declining sales in China.
