Plans that include Mitsubishi were announced as Japan looks to gain a foothold in the electric vehicle market.
Japanese companies Honda and Nissan are planning a merger that would create the world’s third-largest automaker as the industry moves away from fossil fuels.
The company’s two presidents, Honda’s Toshihiro Mibe and Nissan’s Makoto Uchida, signed a memorandum of understanding on Monday calling for the creation of a holding company by August 2026, potentially making them third in the market after Toyota and Volkswagen could.
Honda, currently Japan’s second-largest automaker, is widely seen as the only national partner capable of saving Nissan, which has struggled since its former chief executive Carlos Ghosn was arrested in 2018 for fraud and misuse of company assets.
Ghosn, who denied the allegations and fled to Lebanon after being released on bail, derided the planned merger as a “desperate move” in a video call to reporters on Monday.
Nissan, valued at around $10 billion, said in November it would cut 9,000 jobs, or 6 percent, of its global workforce and reduce its global production capacity by 20 percent after posting a quarterly loss of 9.3 billion yen (60 million US dollars).
But the merger, which would also include smaller Nissan alliance member Mitsubishi Motors, could result in a behemoth worth more than $50 billion based on the market capitalization of all three automakers.
Honda’s Mibe said the company, currently valued at more than $40 billion, will initially lead new management of the combined entity.
Next generation
Car manufacturers in Japan have lagged behind their major competitors Electric vehicles and try to cut costs and make up for lost time.
The three companies, which announced in August that they would share electric vehicle (EV) components such as batteries and jointly research autonomous driving software, would produce about 8 million vehicles.
In 2023, Honda produced 4 million and Nissan 3.4 million. Mitsubishi Motors produced just over 1 million.
Sam Fiorani, vice president of AutoForecast Solutions, a global automotive forecasting company, said Nissan’s experience building batteries, electric vehicles and gas-electric hybrid powertrains could help Honda develop its own next-generation electric and hybrid vehicles.
The integration of the two storied Japanese brands would be the biggest shakeup of the global auto industry since Fiat Chrysler Automobiles and PSA merged in 2021 to form Stellantis in a $52 billion deal.
