The agreement is official. Honda e Nissan have confirmed their merger plan, a step that will give life to the third largest automotive group in the world, immediately after Toyota and Volkswagen. The two Japanese car manufacturers have signed a memorandum of understanding (MoU) which starts discussions for a merger, with the aim of creating a joint holding company. This Mitsubishi Motors could also participate, of which Nissan is the main shareholder, but the final decision on this matter will be made separately by the end of January 2025.
The merger, which could be listed on the Tokyo Stock Exchange in 2026, provides that Honda will appoint the majority of the holding company's board of directors, while the Brand management will remain separate.
Goal of the merger: to strengthen the position in the electric sector
The agreement was conceived to Strengthen Honda and Nissan's position in the electric vehicle sector, a fast-growing market increasingly dominated by Tesla and Chinese manufacturers, with BYD leading the way. The Chinese market, in particular, has become crucial to global growth, with BYD even surpassing Tesla in sales, selling more than 3,7 million electric vehicles this year. Honda and Nissan sales in China, on the other hand, are declining, with Honda reporting a 31% reduction in sales and Nissan an 11% decline.
The merger would allow the companies to optimize production costs, share advanced technologies and accelerate the development of electric vehicles, thus responding to growing global competitiveness.
The creation of the holding company aims to generate an annual turnover exceeding 30 trillion yen (about 200 billion euros) and a operating profit which will exceed 3 trillion yen.
“The business environment for both companies and the automotive industry as a whole has changed rapidly and the pace of technological innovation has continued to accelerate,” the company said in a statement. The MoU announced today aims to serve as an “option for maintain global competitiveness and for the two companies to continue to provide more compelling products and services to customers around the world.”
"Together, we can create a unique way to let them enjoy cars that neither company could get on its own,” Nissan's CEO said. Makoto Uchida. "We are still in the start-up phase of our review and we have not yet decided on a business integration, but to find a direction for the possibility of business integration by the end of January 2025, we are committed to being the only leading company that creates new mobility value,” commented Honda's executive representative, Toshihiro Mibe.
Honda-Nissan: The Details of the Historic Merger
Despite the signing of the MOU, the two companies have stressed that the merger is still in the exploratory phase and that the final decision will be made after careful due diligenceThe integration process involves a final agreement by June 2025, followed by shareholder meetings in 2026, with plans to delist Honda and Nissan stocks from the Tokyo Stock Exchange by summer 2026.
Honda will appoint the majority of the board of directors of the holding, while the two companies will continue to develop their own brands independently. The committee created to guide the merger process will be responsible for identifying and implementing the more specific synergies between the two companies, mainly focusing on reducing production costs and optimizing resources for the production of electric vehicles.
Mitsubishi to evaluate whether to enter into the deal
In addition to the agreement between Honda and Nissan, Mitsubishi Motors, of which Nissan is the main shareholder, has signed a separate memorandum to explore the possibility of participating in the merger. If the integration were to include Mitsubishi, the resulting Japanese group would have a global reach that would exceed 8 million vehicles sold annually, making it one of the world's leaders in the automotive sector. Mitsubishi plans to make a final decision on its participation by the end of January 2025.
Foxconn out of the game
Instead, he leaves the scene, FoxconnThe Taiwanese company, which is looking to expand its contract manufacturing business of electric vehicles, had tried to get closer to Nissan, through talks with Renault, which owns 36% of the company. The offer, however, was rejected by the Japanese company.
The two companies' response on the stock exchange was good
Honda and Nissan shares reacted positively to the deal announcement. On the Tokyo Stock Exchange, they closed up 3,8% and 1,6%, respectively. Mitsubishi Motors fared even better, rising 5,3%.
