The automotive industry is abuzz as Nissan and Honda, two of Japan’s largest car manufacturers, announced the beginning of talks for a potential merger.
The historic integration would bring together Honda’s $40 billion market capitalisation and Nissan’s $10 billion valuation, aiming to create a global automotive giant.
The companies intend to establish a holding company by August 2026, with discussions concluding by June 2025.
If realised, the merger could lead to combined annual sales of 30 trillion yen ($191 billion) and an operating profit exceeding 3 trillion yen.
This bold move comes as both brands grapple with declining sales in key markets like China and the US.
Merger ambitions driven by a need for innovation and resilience
Honda and Nissan’s potential merger is seen as a strategic response to significant shifts in the global automotive market, including the electrification of vehicles and the rise of software-driven mobility solutions.
By pooling their resources, the two companies aim to strengthen their market position and compete against emerging rivals such as BYD and other Chinese automakers dominating the electric and hybrid segments.
Both companies have faced challenges recently.
Honda reported weaker-than-expected earnings, largely attributed to slowing sales in China, while Nissan announced plans to cut 9,000 jobs and reduce its global production capacity by 20%.
These difficulties underline the necessity of exploring synergies to remain competitive in a rapidly evolving industry.
The integration would include delisting both companies’ shares by mid-2026, with the newly formed holding company potentially listed in August 2026.
Honda will hold a majority of seats on the board, reflecting its larger market share and capitalisation.
Together, the two automakers plan to create innovative “mobility value,” blending Honda’s expertise in engineering with Nissan’s advancements in connected car technologies.
Facing competition in China, the US, and beyond
The merger comes at a time when Japanese automakers are losing market share in China, the world’s largest car market.
Both Nissan and Honda have struggled to keep up with domestic brands like BYD, which are revolutionising the market with electric and hybrid vehicles.
In the US, competition remains intense as American and European brands ramp up their electric vehicle offerings.
The partnership also aims to streamline operations, reduce redundancies, and optimise production.
Analysts see this merger as the most significant industry development since Fiat Chrysler and PSA joined forces to create Stellantis in 2021.
While the talks are still preliminary, the deal could reshape the global automotive landscape.
By leveraging their combined strengths, Nissan and Honda have the potential to redefine customer experiences and lead the charge toward a more sustainable and connected future.
The next major milestone will come by January 2025, when the companies aim to finalise a direction for the merger.
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