Japanese automotive giants Honda Motor Co. and Nissan Motor Co. have officially commenced discussions on a potential merger, aiming to establish the world’s third-largest car manufacturer by sales. This strategic move is a response to intensifying competition from electric vehicle (EV) leaders such as Tesla and emerging Chinese manufacturers like BYD.
The proposed merger would involve the creation of a joint holding company, with plans to finalize discussions by June 2025 and establish the new entity by August 2026. Mitsubishi Motors, in which Nissan holds a 34% stake, is also expected to participate in the negotiations, with a decision anticipated by the end of January 2025.
The combined entity is projected to achieve sales of approximately 30 trillion yen (around $270 billion) and operating profits exceeding 3 trillion yen. This consolidation is expected to yield significant synergies, estimated at $6.4 billion, through shared resources and collaborative development in EV technology and autonomous driving systems.
Both companies have faced challenges in key markets, particularly in China, where they have struggled to compete with local EV manufacturers. Nissan has recently announced plans to cut 9,000 jobs and reduce its global production capacity by 20% in response to declining sales. Honda has also reported declining profits, underscoring the need for strategic realignment.
Industry experts have expressed mixed reactions to the merger. Former Nissan Chairman Carlos Ghosn criticized the move, describing it as a sign of panic and questioning the potential synergies between the two companies. He argued that both automakers possess similar strengths, which may limit the benefits of such a merger.
The merger talks come amid a rapidly evolving automotive landscape, with manufacturers worldwide striving to adapt to the shift towards electrification and autonomous driving. The success of this merger will depend on the companies’ ability to effectively integrate their operations and capitalize on shared technologies to enhance competitiveness in the global market.
As a Honda owner, I’m not thrilled about this potential merger with Nissan. Honda has always stood for reliability and innovation in its own unique way, and I worry that merging with Nissan might dilute what makes Honda special. I hope they consider the impact on loyal Honda customers before moving forward.