Facing intense competition in the global automotive market, Honda Motor Company Limited and Nissan Motor Company Limited announced on Monday, 23rd December 2024, the signing of a memorandum of understanding (MOU) to explore a potential business merger. The companies aim to create a ‘world-class mobility company’ targeting sales revenue exceeding 30 trillion yen and an operating profit of more than 3 trillion yen.
Mitsubishi Motors has also signed a three-party MOU with Honda and Nissan, indicating its potential involvement in the merger. A final decision on Mitsubishi’s participation is expected by January 2025.
Honda and Nissan plan to finalize discussions by June 2025, culminating in a definitive agreement. The two automakers will then form a joint holding company via a joint share transfer, which will act as the parent company for both. Honda will hold the majority of seats on the holding company’s board.
This business integration will not only combine the automobile operations of both companies but will also leverage Honda’s leadership in motorcycles and expand into a diverse range of mobility ventures, including automotive and aviation,” said Toshihiro Mibe, Director, President, and Representative Executive Officer of Honda Motor Company, during a joint press conference in Tokyo.
Makoto Uchida, Director, Representative Executive Officer, President, and CEO of Nissan Motor Company, highlighted the rapidly evolving competitive landscape, noting the increasing importance of achieving economies of scale as new players enter the market.
Both Honda and Nissan have faced declining market shares in China, the world’s largest automotive market, where local electric vehicle (EV) manufacturers like BYD have intensified competition. Earlier this year, the two automakers explored collaboration in electrification and vehicle intelligence, announcing in March their consideration of joint efforts. By August, they had agreed to conduct joint research on platforms for next-generation software-defined vehicles (SDVs).
Nissan Motor has been grappling with a sales downturn in China and the US, aiming to cut costs by USD 2.6 billion in the current fiscal year. The automaker has also slashed its annual profit forecast by 70% and announced plans to reduce global manufacturing capacity by 20% while laying off 9,000 employees. Nissan’s struggles have been exacerbated by its failure to fully recover from the upheaval following the 2018 ousting of former chairman Carlos Ghosn and the subsequent scaling back of its partnership with Renault SA.
Addressing concerns, Honda President Toshihiro Mibe acknowledged that some stakeholders might view the merger as a move to benefit Nissan. However, he clarified that the integration hinges on Nissan completing its turnaround efforts to stabilize its business, while Honda continues to optimize its capital with a robust revenue base.
“If Nissan and Honda fail to stand on their own feet, these integration talks will not succeed,” Mibe said. Nissan CEO Makoto Uchida echoed the sentiment, emphasizing the importance of transformation and growth. “After executing our turnaround plan, we must focus on achieving scale and expansion. This growth will come through partnerships,” Uchida stated.
Despite being in India for over two decades, Nissan currently offers only two models in its portfolio and holds a mere 1% market share. Recently, the company announced plans to launch three all-new models in the country, including two mid-size SUVs and an electric SUV targeting the mass market segment. However, given the global developments and uncertainties, it remains unclear how these changes will affect Nissan’s operations in India.
Once established, both Nissan and Honda will operate as fully owned subsidiaries under the joint holding company. Despite this new structure, the companies plan to maintain their independent brand development, ensuring equal growth for both Honda and Nissan.
The shares of the newly formed joint holding company are set to be listed on the Prime Market of the Tokyo Stock Exchange (TSE), with the listing scheduled for August 2026.
Following the listing, both Nissan and Honda will be delisted from the TSE, as they will become wholly owned subsidiaries of the joint holding company. However, shareholders of both companies will still be able to trade shares of the joint holding company, which will be issued during the share transfer, on the TSE. Additional details regarding the joint holding company, including its name, registered office, leadership, executive team, and organizational structure, will be finalized by the time the definitive agreement is executed.
Mitsubishi to Capitalize on Global Strengths: Takao Kato, Director, Representative Executive Officer, President & CEO of Mitsubishi Motors Corporation, highlighted that Mitsubishi’s business scale and market strengths differ from those of Nissan and Honda. While Nissan and Honda are expected to take the lead in developing new technologies, including Software-Defined Vehicles (SDVs) and software, Mitsubishi Motors plans to contribute to the global operations of the two companies by leveraging its expertise in areas where it excels. These include its strong presence in ASEAN markets and its specialization in technologies for vehicles such as compact pickup trucks, Kato explained.
Renault-Nissan Collaboration: Despite the recent announcement of a potential alliance with Honda, Nissan has emphasized its commitment to continue collaborating with French automaker Renault on projects that create synergies. “As we move forward, we will engage in various discussions with our existing partners,” said Toshihiro Mibe, adding that the companies’ current relationships “could be valuable assets.”
Renault Group, the principal shareholder of Nissan, acknowledged the announcements but noted that they are “still in the early stages.” The Group stated that it would consider all options in the best interest of the Group and its stakeholders. “We continue to execute our strategy and advance projects that generate value for the Group, including initiatives already launched within the Alliance,” the company added.
In India, Nissan and Renault maintain an alliance, sharing the Oragadam plant near Chennai. This partnership allows both companies to optimize production and reduce costs by leveraging shared resources and manufacturing capabilities. Renault Nissan Automotive India Pvt. Ltd. (RNAIPL) serves as the dedicated manufacturing facility for the alliance, producing cars and powertrain units for both companies for domestic and export markets.
