
Honda and Nissan are in discussions for a potential merger by 2026, marking a seismic shift in Japan's automobile industry. This significant move is aimed at navigating the escalating competition from leading brands such as BYD and Tesla, which would create the world’s third-largest auto group by vehicle sales after Toyota and Volkswagen.
The merger would offer both companies opportunities to expand operations and share resources, enhancing their competitiveness. Together, the two companies are targeting combined sales of ¥30 trillion ($191 billion) along with an operating profit of ¥3 trillion. Honda is expected to dominate the merged entity, with a majority representation on the company’s board of directors.
In addition, Mitsubishi Motors, in which Nissan holds significant equity, is also considering a potential merger. However, the decision on this is expected by January 2025. A merger with Mitsubishi Motors would further boost the group’s global sales, aiming to surpass Hyundai and Kia, and would increase the group’s total annual vehicle production to over eight million units.
While citing technological advancements in electrification and autonomous driving, Honda CEO Toshihiro Mibe stated: “The rise of Chinese automakers and new players has changed the car industry quite a lot.”
The companies are poised to finalise the merger discussions by June 2025, establishing a strong entity by August 2026. At that time, the shares of both Nissan and Honda would be delisted. Both manufacturers have been collaborating on electrification and software development since March and expanded this partnership to include Mitsubishi Motors in August.
According to Honda CEO Toshihiro Mibe, “This is not a rescue of Nissan,” emphasising that Nissan’s turnaround was a “prerequisite” for their merger. Last month, Nissan announced plans to cut 90,000 jobs and reduce global production capacity by 20% due to significant sales declines in key markets such as the US. Honda has faced challenges in China, though it remains stable due to strong sales of motorcycles and hybrid vehicles.
Renault, Nissan’s largest shareholder, stated that it is willing to “discuss with Nissan and consider all possible options.” Meanwhile, Taiwanese EV manufacturer Foxconn’s earlier bid to merge with Nissan was rejected.
This merger announcement sparked positive market responses, with Honda shares rising 3.8%, Nissan up 1.6%, and Mitsubishi Motors gaining 5.3%, reflecting optimism for the partnership and expected future growth.