What’s new
A possible merger between Honda Motor and Nissan caught investors’ attention as Honda’s shares rose Monday.
Why it matters
Japanese auto titans Honda and Nissan are working on a potential merger that would create the world’s third-largest automaker, as the global industry races to adapt to the electric vehicle (EV) revolution .
The merger comes at a crucial time for Japanese automakers, which are struggling to keep pace with global EV leaders like Tesla and BYD. Honda and Nissan plan to leverage their combined scale to invest in electric vehicle production, shared components and advanced autonomous driving software.
What you need to know
The companies announced Monday that they had signed a Memorandum of Understanding and that Mitsubishi Motors Corp., a smaller member of the Nissan alliance, had also agreed to participate in talks to integrate their businesses.
The proposed deal aims to unify the operations under a joint holding company, led by Honda, while maintaining the distinct identities of each brand, Honda’s president, Toshihiro Mibe, said. If the merger is completed, the combined entity could better compete with market leaders Toyota and Volkswagen.
Nissan Chief Executive Makoto Uchida, left, and Honda President Toshihiro Mibe attend a joint press conference in Tokyo on March 15, 2024. A possible merger between Honda Motor and Nissan has caught investors’ attention as Honda shares rose on Monday.
Kyodo News/AP
Market reaction and sector outlook
News of the merger sent shares of both companies soaring, with shares of Honda rising 3.8 percent and Nissan up 1.6 percent in Tokyo, reflecting optimism about the potential reform of the global automotive landscape. Additionally, analysts believe the deal could lead to further consolidation in the auto industry as companies look to share costs and drive innovation.
Based on the market capitalization of Honda, Nissan and Mitsubishi, the merger could be valued at more than $50 billion. Together they would produce about 8 million vehicles annually, still behind Toyota’s 11.5 million but ahead of most competitors.
What could the merger bring?
Analysts point to potential benefits for both companies. Honda could gain access to Nissan’s expertise in large SUVs, EV batteries and hybrid technologies. Conversely, Nissan would benefit from Honda’s operational efficiency and reputation for quality.
However, Nissan’s turbulent recent history could pose challenges. The automaker has faced financial problems, management turmoil and reputational damage following the arrest of former chairman Carlos Ghosn in 2018.
What people say
Honda president Toshihiro Mibe said: “We have come to realize that if both sides want to be leaders in this mobility transformation, it is necessary to make bolder change than collaboration in specific areas.”
While acknowledging the challenges ahead, he added that there are “points that need to be studied and discussed. Frankly, the possibility of this not being implemented is not zero.”
Nissan CEO Makoto Uchida said: “We expect that if this integration is achieved, we will be able to deliver even more value to a broader customer base.”
Cabinet Secretary Yoshimasa Hayashi said he would not comment on the details of the carmakers’ plans at a routine briefing on Monday, but he said Japanese companies must remain competitive in the rapidly changing market.
“As the business environment surrounding the automotive industry is largely changing, with competitiveness in batteries and software becoming increasingly important, we expect that measures necessary to survive international competition will be taken,” he says. Hayashi said.
Meanwhile, speaking via video link to reporters in Tokyo on Monday, Ghosn called the planned merger a “desperate move.”
What happens next
While details of the merger remain unclear, Mibe said they aim to have a formal merger agreement in place by June and complete the deal and list the holding company on the Tokyo Stock Exchange by August 2026.
This article contains reporting from The Associated Press.
