Key Points
- Honda and Nissan plan to merge by 2026, creating the third-largest auto group globally.
- The merger aims to combat competition from Tesla and Chinese EV makers like BYD.
- Mitsubishi Motors may join, boosting combined sales to over 8 million vehicles annually.
- Shares in Honda, Nissan, and Mitsubishi rose following the announcement of the merger.
Honda and Nissan have announced plans to merge by 2026 in a landmark move for Japan’s automotive industry. The move responds to the growing dominance of Chinese electric vehicle (EV) makers. The merger would create the world’s third-largest auto group by vehicle sales, trailing only Toyota and Volkswagen.
The collaboration seeks to combine resources and scale to counter competitive pressure from Tesla and Chinese companies like BYD. Mitsubishi Motors, partially owned by Nissan, is also considering joining and is expected to decide by January.
Honda CEO Toshihiro Mibe cited the transformative impact of Chinese automakers and advancements in electrification and autonomous driving as key motivators. The companies aim for combined sales of 30 trillion yen ($191 billion) and operating profits exceeding 3 trillion yen.
Talks are set to conclude by mid-2025, and a holding company is planned for August 2026. With a market capitalization of over $40 billion, Honda will lead the joint company’s board. Including Mitsubishi Motors would elevate the group’s annual sales to over 8 million vehicles, surpassing South Korea’s Hyundai-Kia group.
Both companies have faced challenges in the competitive Chinese market. Honda experienced a sales slump despite strong motorcycle and hybrid car divisions. At the same time, Nissan announced plans to cut 9,000 jobs and reduce global production by 20% after poor performance in China and the U.S. markets. However, Honda emphasized that the merger is not a rescue operation for Nissan, stressing that a turnaround is a prerequisite for success.
Renault, Nissan’s largest shareholder, has expressed openness to the merger, while Taiwan’s Foxconn reportedly approached Nissan about an EV partnership but was rebuffed. Following the announcement, shares in Honda, Nissan, and Mitsubishi Motors rose. Former Nissan chairman Carlos Ghosn doubted the merger’s potential, citing a lack of complementarity between the two automakers. Despite skepticism, Honda and Nissan maintain their existing partnerships with other automakers like General Motors and Renault on a project-by-project basis.
