TOKYO (AP) — Japanese automakers Honda and Nissan have announced plans to join forces to form the world’s third-largest automaker by sales, as the industry undergoes dramatic changes in the transition away from fossil fuels.
The two companies said they had signed a Memorandum of Understanding on Monday and that Mitsubishi Motors, a smaller alliance member of Nissan, had also agreed to participate in talks to integrate their businesses.
“We expect that as this integration comes to fruition, we will be able to deliver even more value to a broader customer base,” Nissan CEO Makoto Uchida said in a statement.
Automakers in Japan have lagged behind their major rivals in electric vehicles and are trying to cut costs and make up for lost time.
News of a possible merger surfaced earlier this month, with unconfirmed reports that talks of closer cooperation were partly driven by Taiwanese iPhone maker Foxconn’s ambitions to team up with Nissan, which has an alliance with France’s Renault SA and Mitsubishi.
A merger could result in a behemoth worth more than $50 billion, based on the market capitalization of all three automakers. Together, Honda and Nissan’s alliance with France’s Renault SA and smaller automaker Mitsubishi Motors Corp. gain scale to compete with Toyota Motor Corp. and with the German Volkswagen AG. Toyota has technology partnerships with Japan’s Mazda Motor Corp. and Subaru Corp.
Even after a merger, Toyota, which launched 11.5 million vehicles by 2023, would remain Japan’s leading automaker. If they participate, the three smaller companies would make about 8 million vehicles. In 2023, Honda will earn 4 million and Nissan 3.4 million. Mitsubishi Motors made just over 1 million.
Nissan, Honda and Mitsubishi announced in August that they would share electric vehicle components such as batteries and jointly research autonomous driving software to better adapt to dramatic changes around electrification, following a preliminary agreement between Nissan and Honda that was closed in March.
Honda, Japan’s second-largest automaker, is widely seen as the only likely Japanese partner capable of rescuing Nissan, which has struggled following a scandal that began with the arrest of former chairman Carlos Ghosn in late 2018 on charges of fraud and misuse of company resources, allegations he denies. He was eventually released on bail and fled to Lebanon.
Ghosn spoke to reporters in Tokyo via video link on Monday and derided the planned merger as a “desperate move.”
From Nissan, Honda could get truck-based, body-on-frame large SUVs like the Armada and Infiniti QX80 that Honda doesn’t have, with big towing capacity and good off-road performance, Sam Fiorani, vice president of AutoForecast Solutions, told Associated Press.
