In a move that could reshape the global automotive industry, Honda and Nissan are set to announce plans to explore a potential merger by establishing a joint holding company. The merger, which could be finalized by June 2025, would create the third-largest auto group in the world, trailing only Toyota and Volkswagen. This consolidation comes as legacy automakers, including Nissan and Honda, struggle to compete with the growing influence of Tesla and Chinese electric vehicle (EV) giants like BYD.
If Mitsubishi Motors is included in the deal, the Japanese group’s global sales would exceed 8 million vehicles, surpassing Hyundai and Kia. The merger would be the largest restructuring since Fiat Chrysler Automobiles and PSA merged in 2021 to form Stellantis in a $52 billion deal. The companies aim to combine their resources to better compete with rapidly advancing competitors, focusing on electrification, software development, and joint research initiatives.
Despite the optimism surrounding the deal, skepticism remains. Former Nissan Chairman Carlos Ghosn, speaking from Lebanon, criticized the merger plan, citing a lack of complementarity between the two companies. Ghosn, who fled Japan in 2019 to avoid a trial for financial misconduct, believes that the merger would not succeed due to overlapping business interests. “There is duplication everywhere,” Ghosn said, arguing that the lack of synergy could undermine the potential for success.
The plan calls for the establishment of a holding company by August 2026, which would be listed on stock exchanges while Honda and Nissan would delist. Honda is expected to appoint the majority of the board members, including the leader of the new entity, signaling a shift in control.
While stock market investors have reacted positively—Honda shares rising 3.8%, Nissan increasing by 1.6%, and Mitsubishi climbing 5.3%—the companies are currently facing challenges that could complicate the merger. Both Honda and Nissan have struggled with declining sales in China, where domestic brands like BYD and other local players dominate the electric vehicle and hybrid markets.
In a move to address these issues, Nissan recently announced plans to cut 9,000 jobs and reduce its global production capacity by 20% due to falling sales in China and the U.S. Similarly, Honda has reported weaker-than-expected earnings, pressured by the same global challenges. These issues are compounded by the competition posed by Chinese automakers and Tesla, which has revolutionized the market with its electric vehicles.
French automaker Renault, Nissan’s largest shareholder, has expressed general support for the merger in principle, but is closely evaluating its implications. Additionally, Taiwanese company Foxconn, which had previously shown interest in bidding for Nissan, paused its plans after meetings with Renault in France. This highlights the complexity of the evolving auto industry, where partnerships and mergers are increasingly necessary to stay competitive.
The potential merger between Honda and Nissan reflects the broader trend of consolidation within the global automotive industry. As manufacturers navigate the rapid transformation driven by electrification, technological innovation, and shifting consumer preferences, such partnerships are becoming crucial for survival. The industry is at a crossroads, and the next few years could see significant changes as traditional automakers adjust to the future of mobility.
As the automotive landscape evolves, only time will tell if this merger will succeed in reshaping the industry, or if it will face the same challenges that have plagued past consolidations.
Afsheen Gohar is a seasoned writer with a wealth of experience in crafting authentic and well-researched articles. Her dedication to delivering high-quality content is evident in her work, where she combines a passion for storytelling with a commitment to accuracy and depth. Afsheen’s writing reflects her ability to engage readers with compelling narratives while providing valuable insights on a diverse range of topics.
