Japanese Automakers Nissan and Honda Begin Discussions for a 2026 Merger

What Happened?

In a joint press release Japanese automakers Nissan and Honda stated ‘Nissan Motor Co., Ltd. ("Nissan") and Honda Motor Co., Ltd. ("Honda") have signed a memorandum of understanding (MOU) to start discussions and considerations toward a business integration between the two companies through the establishment of a joint holding company.’

The joint press release further stated:

‘If the business integration can be realized, both companies can aim to integrate their respective management resources such as knowledge, human resources, and technologies; create deeper synergies; enhance the ability to respond to market changes; and expect to improve mid- to long-term corporate value. Additionally, Nissan and Honda can aim to further contribute to the development of Japan's industrial base as a “leading global mobility company” by integrating Nissan and Honda's four-wheel-vehicle and Honda's motorcycle and power products businesses, enabling the brands of both companies to become more attractive and to deliver more attractive and innovative products and services to customers worldwide.’

Why it Matters

If completed, the merger, initially slated to be completed by August of 2026 would create the third largest automobile manufacturer in the world with a new worth of over $50 billion.

Under the current proposed terms, Nissan and Honda would continue operating under their own brand names, but with a new joint holding company as the parent company.

Steve Dent of Engadget reported:

‘Nissan and Honda previously announced plans to work together on EV components and software development, but the joint company would be far more integrated. According to the press release, the plan includes: standardizing vehicle platforms; unifying research and development teams; and optimizing manufacturing systems and facilities. All of that is usually designed to cut costs, so it could spell significant layoffs in Japan and elsewhere.’

A possible reason for the proposed merger is the rise of China’s dominance of the electric vehicle market, which has substantially eroded Japan’s own competitiveness in the global electric vehicle market.

How it Affects You

Kantaro Komiya of Reuters quoted recent comments by Honda’s CEO to explain the coming merger:

‘The rise of Chinese automakers and new players has changed the car industry quite a lot, said Honda CEO Toshihiro Mibe, citing technological trends of electrification and autonomous driving. We have to build up capabilities to fight with them by 2030, otherwise we'll be beaten.’

The two companies would aim for combined sales of 30 trillion yen ($191 billion) and operating profit of more than 3 trillion yen through the potential merger, they said.

While the details of the merger between Nissan and Honda have yet to be ironed out, such a move would not only strengthen the Japanese companies against competition from China, but also from Tesla, another major producer of electric vehicles.