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Japanese automobile manufacturers Honda and Nissan recently announced that they plan to merge by 2026. The merger would potentially create the world's third-largest auto manufacturing company by sales, behind Toyota and Volkswagen. In a press conference held on Monday, December 23, 2024, Honda CEO Toshihiro Mibe elaborated on the move, saying:
"The rise of Chinese automakers and new players has changed the car industry quite a lot. We have to build up capabilities to fight with them by 2030, otherwise we'll be beaten"
CNBC, citing Mibe, reported that both companies needed greater scale to help develop new technologies in electric vehicles and intelligent driving so as to compete with pressure from EV manufacturers like Tesla and BYD (a Chinese company).
As news of the development spread, internet users were quick to react. One commented:
"they bout to make the most reliable car ever."
Many responded positively to the move, with some guessing what the company could be called. Here are some comments seen on Instagram:
However, the announcement drew mixed reactions, with some criticizing Nissan's transmissions.
Mitsubishi Motors plans to join Honda and Nissan in the merger
According to a December 2024 report by Reuters, the merger between Honda, Japan's second-largest automaker, and Nissan, the third-largest, would rank as the second-largest in the industry, following the 2021 merger of Fiat Chrysler Automobiles and PSA, which created Stellantis.
During the press conference, the companies announced that Mitsubishi Motors (of which Nissan is a top shareholder) is also considering joining. However, this will be confirmed by the end of January 2025.
Additionally, they plan to conclude talks by June 2025 and set up a holding company (which would become the parent company) by August 2026. They also plan to delist their respective shares around that time. According to a December 2024 article by CNBC, Honda would be nominating most of the board members of this company.
Reuters reported that with the merger, the two companies aim for potential combined sales of 30 trillion yen ($191 billion) and operating profit of over 3 trillion yen ($19.1 billion). Additionally, per the publication, the integrated entity would have a combined value of $54 billion (Honda reported a 1.382 trillion yen profit in March 2024, and Nissan reported 568.7 billion yen).
The announcement to merge comes after the two companies revealed they were considering collaborating on electrification research and software development (in March). By August, Mitsubishi Motors was part of the collaborative effort.
In November, Nissan announced it would slash 9,000 jobs and reduce its global production capacity by a fifth after declining profits. Following Monday's announcement, the company saw a spike in its shares.
