Japanese government officials announced on Monday (December 23) that Honda and Nissan companies have informed the Japanese government of their plans to begin merger negotiations, creating the world’s third-largest automotive group to jointly combat the threat from Chinese competitors.
According to reports from Kyodo News and Reuters, the heads of Honda and Nissan, as well as the president of Nissan’s partner Mitsubishi Motors, will hold a press conference in Tokyo at 5 p.m. local time. Sources familiar with the matter indicate that their goal is to reach an agreement by June next year and establish a holding company in August 2026, with shares of the holding company to be listed while Honda and Nissan will be delisted.
If the merger proceeds smoothly, the new automaker would become the world’s third-largest automotive group, trailing only Toyota and Volkswagen.
Currently, Honda is Japan’s second-largest automaker after Toyota, with a market value exceeding $40 billion, while the third-ranked Nissan Motor Co. is valued at around $10 billion.
Honda and Nissan plan to reduce production expenses by sharing components and sharing the enormous development costs.
In March of this year, the two companies indicated that they would collaborate on the joint development of automotive software, core components for electric vehicles, and related products, and in August, expanded the scope of their collaboration to include Mitsubishi Motors.
Last month, Nissan announced plans to cut 9,000 jobs and reduce its global capacity by 20%, citing significant sales declines in China and the United States. Honda also reported lower-than-expected profits due to declining sales in the Chinese market.
French automaker Renault S.A. is Nissan’s largest shareholder. Sources suggest that Renault is generally open to Nissan’s deal with Honda.
Sources informed Reuters that Taiwan’s Foxconn (Hon Hai) had previously approached Nissan for a merger to expand its electric vehicle business but was rejected by Nissan.
Sources told Bloomberg that Foxconn has decided to first monitor the progress of Nissan’s negotiations with Honda on the merger before determining their next steps.