Honda, Nissan Announce Merger Plans Amid Industry Uncertainty

What Happened?

Not long after reports of Honda and Nissan entering into talks to join forces, the companies made it official Monday to create the world’s third-largest automaker.

Nissan Motor Co. and Honda Motor Co. signed a memorandum of understanding (MOU) to begin discussions toward integrating both companies ‘through the establishment of a joint holding company.’

The two companies reportedly announced in a statement that they would seek combined sales of $191 billion and an operating profit of more than $19 billion through the move.

They expect to wrap up the deal by June 2025, and have a holding company in place when both companies' shares are delisted by August 2026.

If successful, the deal would give the two companies more resources to compete with a growing threat from Chinese carmakers.

The companies released a joint statement that reads:

‘The MOU between Nissan and Honda announced today is aimed to serve as an option to maintain global competitiveness and for the two companies to continue to deliver more attractive products and services to customers worldwide.’

The Japanese brands currently hold a strategic partnership agreement with Mitsubishi Motors which will also be rolled into this merger.

Why it Matters

Nissan has struggled since the collapse of its alliance with Renault.

Some reports state that the legacy brand could have faced bankruptcy as early as 2026 amid huge amounts of debt due soon.

Nissan also made plans to cut 9,000 jobs and 20% of its global production capacity last month after sales plunged in the key China and U.S. markets.

This ultimately put Nissan in desperate need of a larger merger partner like Honda, who reported their margins slipped nearly 20%.

Chinese automakers and U.S. all-electric carmaker Tesla are just a few that have put pressure on these legacy brands to perform and turn a profit in the marketplace.

Honda and Nissan were encouraged to merge in 2019 but rejected the Japanese government's suggestion.

Both brands could join auto groups like Stellantis who made a similar pivot in January 2021 to create one of the world's largest auto groups.

Many automakers in the industry are still aiming to adjust and adapt to the big hits they took during the COVID-19 pandemic which forced brands to implement emergency measures.

How it Affects You

Some analysts suggest that mergers like this can help consumers as the auto industry faces an affordability shift.

Toyota reportedly made 11.5 million vehicles in 2023.

Data shows that Toyota would still outpace Honda, Nissan, and Mitsubishi combined and remain the leading Japanese automaker.

That production gap plays a huge role in pricing measures as a merger of this magnitude could help supply under one operating company.