Honda & Nissan Officially Begin Merger Talks To Become World’s Third-Largest Automaker. Here Are the Details

Honda and Nissan have officially begun merger talks to become the third-largest automobile manufacturer in the world. The official talks come just days after speculation started about the potential of the two manufacturers merging. Here are the details we know so far.

Honda & Nissan May Generate $191.4 Billion per Year in Profit

According to CNBC, the two Japanese automakers announced the potential merger at a press conference on Monday, Dec. 23. Toshihiro Mibe, CEO of Honda, stated that the companies needed to operate on a larger scale to compete in the development of new technologies for electric vehicles and intelligent driving. According to a translation of Mibe’s statements, a business integration would provide the companies with an “edge that will not be possible under the current collaboration framework.”

Mibe added that, if approved, the integration would be a mid-to-long-term project that is not expected to show visible progress until 2030 and beyond.

He stated that the purpose of the agreement would be to share intelligence and resources, provide economies of scale and synergies, and protect both brands.

Mitsubishi, Nissan’s strategic partner, has received an invitation to join the new group and will decide whether to do so by the end of January 2025.

“Today marks a pivotal moment as we begin discussions on business integration that has the potential to shape our future,” Nissan CEO Makoto Uchida said in a statement released Monday regarding the merger. “Together, we can create a unique way for [customers] to enjoy cars that neither company could achieve alone.”

A holding company would be established as the parent entity for both Honda and Nissan, with a listing on the Tokyo Stock Exchange. The bigger Honda will appoint the majority of board members for the integrated entity. Mibe stated that the combined entity could generate revenue of 30 trillion yen (equivalent to $191.4 billion) and an operating profit exceeding 3 trillion yen.

Japan’s Toyota is the largest automaker globally in sales, with Germany’s Volkswagen in second place. A partnership between Nissan and Honda would allow the newly formed group to surpass South Korea’s Hyundai.

Does the Merger Make Sense?

News of the merger comes less than a week after initial speculation about it began. Business analysts are suggesting that the merger would be a good thing.

The Chinese electric vehicle manufacturer BYD has been gaining ground in the Asian market, complicating the efforts of the two Japanese car manufacturers to keep their market share and profitability. BYD has emerged as one of China’s largest automakers, surpassing Tesla’s EV sales revenue in the third quarter of 2024, thanks to its combination of low prices and advanced technology.

Nissan announced disappointing financial results for the first two quarters of fiscal year 2024 in November. The company announced a plan to aggressively cut costs, including reducing its workforce by 9,000 employees, in order to address slowing sales and declining profits.

This year’s first half saw a 21.5% drop in Honda vehicle sales in China. The company halted production at three of its plants in China on a temporary basis to cut down inventory. It has been reported that Honda also reduced its workforce in conjunction with the halt in manufacturing.

Nissan and Honda joining forces would certainly help them advance EV technology and regain a competitive advantage. Until now, neither company has gained traction in the creation of a low-cost, high-tech electric vehicle lineup.

“There are limits if we are to do that alone. So, that had triggered us to engage in partnership with Honda,” said Nissan Uchida, referring to the March agreement to work on EV batteries and software.