Honda and Nissan announce merger plans
Honda and Nissan have officially confirmed their previously leaked merger intentions and have signed a letter of intent to hold talks on a “business integration” through the establishment of a joint holding company. A newly created preparatory committee will explore all possibilities. However, both sides already agree that they could form “a world-class mobility company with sales revenue exceeding 30 trillion yen and operating profit of more than 3 trillion yen.” That is the equivalent of around 180 billion euros in sales and 18 billion euros in profit. The companies also confirmed that Mitsubishi will join the merger talks at the beginning of 2025.
If the merger is successful, it would create the third-largest car company in the world (in terms of unit sales), with only Toyota and the Volkswagen Group being larger. However, successful negotiations are not a foregone conclusion. As the Japanese news agency Kyodo reports, one of Honda’s conditions is that Nissan improves its performance. Honda also confirms this in its own announcement. It states that Nissan must complete its “turnaround actions.” That Honda is currently the stronger partner also becomes clear, as it would “nominate a majority of each of the internal and external directors of the joint holding company.”
Kyodo also writes that Nissan’s ownership structure will likely play a role in the negotiations. According to the news agency, Foxconn is considering buying Renault’s Nissan shares. It says that could influence the course of the talks between Honda and Nissan. The Taiwan-based manufacturer hopes the potential deal will primarily benefit its electric car business.
But back to the two main players: both want to become 100 per cent subsidiaries of the new holding company, but nevertheless continue to operate their own brands alongside each other and develop them “equally.” The Japanese plan to sign a final agreement on the company integration in June 2025 and complete the necessary share transfers in August 2026 – subject to the approval of the Annual General Meetings and obtaining the necessary authorisations.
Honda and Nissan have been exploring how they can cooperate on software-defined electric cars since the spring. According to an interim status report from August, batteries and e-axles, among other things, will become the main areas of intensified cooperation. Honda is regarded as a hybrid pioneer, but is a latecomer when it comes to battery-electric cars. Nissan was once an electric pioneer with the Leaf, but later lost touch. Now, however, the collaboration is being considered on a much larger scale. According to Honda, even during the talks on the smart EV cooperation, the “business environment for both companies and the wider automotive industry has rapidly changed and the speed of technological innovation has continued to accelerate.” Both sides see the merger as a way to “maintain global competitiveness” and “continue to deliver more attractive products and services to customers worldwide.”
Honda-Nissan would produce eight million cars per year
If the plans materialise, the result would be a group with annual sales of around eight million vehicles. In 2023, Honda and Nissan were numbers seven and eight worldwide. Together, they would overtake companies such as GM, Stellantis and Hyundai-Kia to take third place, behind VW and Toyota.
A merger could boost both companies. Nissan, in particular, is struggling: Nissan had to lower its profit forecast for the current financial year due to weak business in China, among other things, and imposed a radical cost-cutting programme in November. The Japanese company wants to reduce its global production capacities by 20 per cent and cut 9,000 jobs. Honda, on the other hand, is struggling to keep pace with the competition when it comes to investing in new technologies. The partnership between Honda and GM is also in trouble. For example, a collaboration on a self-driving car was terminated at the beginning of December. Honda has also lost 30 per cent of its market share in China.
The Japanese define seven areas that they see strengthened by a merger. First and foremost, these include economies of scale through the standardisation of vehicle platforms. They want to complement each other’s vehicle ranges (“including ICE, HEV, PHEV, and EV models”), they say. Secondly, both sides hope to increase development capacity by merging their R&D divisions; and thirdly, to optimise production systems and facilities. Kyodo specifies that Honda and Nissan sometimes want to build their vehicles in each other’s plants. Other goals cited include the merger of purchasing, greater operational efficiency, new financial services to promote sales and the creation of a talent base.
Honda Director Toshihiro Mibe commented on the merger intentions as follows: “Honda and Nissan are two companies with distinctive strengths. We are still at the stage of starting our review, and we have not decided on a business integration yet, but in order to find a direction for the possibility of business integration by the end of January 2025, we strive to be the one and only leading company that creates new mobility value through chemical reaction that can only be driven through synthesis of the two teams.”
Makoto Uchida, President and CEO of Nissan, said: “Today marks a pivotal moment as we begin discussions on business integration that has the potential to shape our future. If realized, I believe that by uniting the strengths of both companies, we can deliver unparalleled value to customers worldwide who appreciate our respective brands. Together, we can create a unique way for them to enjoy cars that neither company could achieve alone.”
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