Two of Japan’s leading auto manufacturers are ending 2024 with news that would shake up the auto industry over next couple of years.
Officials from Honda and Nissan confirmed on Dec. 23 the companies are in talks to merge by 2026 that would create the world’s third-largest auto group by vehicle sales after Toyota and Volkswagen. Mitsubishi Motors, in which Nissan is top shareholder, is considering joining and would make a decision by the end of January.
No mention was made to the affect the potential merger would have on auto dealerships of the companies involved in talks.
Honda’s Mibe Statements
The merger of Honda, Japan’s second-largest automaker, with Nissan, its No. 3, would be the biggest auto deal since Fiat Chrysler Automobiles and PSA $52-billion merger in 2021 that formed Stellantis. The two Japanese companies would aim for combined sales of $191 billion.
In a joint press conference in Tokyo, Honda CEO Toshihiro Mibe cited technological trends of electrification and autonomous driving as the impetuous of the possible deal. Like other foreign carmakers, the two companies have suffered losses in China to BYD and other domestic makers of electric and hybrid cars.
“The rise of Chinese automakers and new players has changed the car industry quite a lot,” said Mibe. “We have to build up capabilities to fight with them by 2030, otherwise we’ll be beaten.”
A business integration would give the companies an “edge that will not be possible under the current collaboration framework,” added Mibe.
June 2025 Deadline
The timeline offered is to wrap up talks around June 2025 before setting up a holding company by August 2026, when shares of both companies would be delisted. Honda would appoint the majority of the company’s board. Mibe noted the integration would be a project not expected to show visible progress until 2030 at the earliest.
Honda and Nissan have been exploring ways to bolster their partnership, including a merger. In March, both said they were considering co-operation on electrification and software development and widened the collaboration to Mitsubishi Motors in August.
French automaker Renault, Nissan’s largest shareholder, said it would “discuss with Nissan” the proposals and consider all possible options.
Nissan Progress Needed
Mibe noted the merger was “based on the assumption that Nissan completes its turnaround action. If Nissan and Honda fail to stand on their own feet, the business integration talks will not come to fruition.”
Nissan CEO Makoto Uchida reiterated negotiations does not mean “we have given up on a turnaround…After doing this turnaround action for future development, future growth, we need to look at ultimate size and growth. This growth will be through partnerships.”
Combining with Mitsubishi Motors would take the Japanese group’s global sales to more than eight million cars. The current No. 3 is South Korea’s Hyundai and Kia.
