Honda, Nissan sign MoU to explore merger – decision by June 2025; Mitsubishi considering joining alliance

It’s now official. Honda and Nissan have signed a memorandum of understanding (MoU) to explore the possibility of a merger (worded as “business integration” in the joint press release), which will see the establishment of a joint holding company.

“Today marks a pivotal moment as we begin discussions on business integration that has the potential to shape our future. If realised, 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,” said Makoto Uchida, director, president, CEO and representative executive officer of Nissan.

Prior to this, both automakers were engaged in various MoUs, including one signed on March 15 this year regarding a strategic partnership for the era of vehicle intelligence and electrification. Another MoU followed on August 1 to deepen the framework of the one signed in March, with joint research to be carried out in vehicle intelligence and electrification.

Over the next few months, a committee study how best to implement the merger, with expected synergies being the standardisation of vehicle platforms, enhanced R&D for better development capabilities, realising cost synergies, optimising manufacturing systems, strengthening supply chains, efficiency improvements as well as human resources.

Both companies aim to reach a definitive agreement concerning execution of the business integration (including the share transfer plan) by June 2025. Should the deal come to fruition, Nissan and Honda aim to become a world-class mobility company with sales revenue exceeding 30 trillion yen (about RM857 billion or USD190 billion).

The deal would need to be approved by shareholders of both companies in a meeting scheduled in April 2026, while also meeting various government regulations. Following this, both automakers will be delisted from the Tokyo Stock Exchange (TSE) sometime around July-August 2026.

The newly established joint holding company will then then be listed on the TSE by August next year, with both Honda and Nissan becoming wholly owned subsidiaries. In the joint release, it is stated that at the time of the effective date of the share transfer in August, it is planned that Honda will hold a majority role in the new company’s management structure. Despite the merger, both companies will continue to coexist and developing their respective brands.

“Creation of new mobility value by bringing together the resources including knowledge, talents, and technologies that Honda and Nissan have been developing over the long years is essential to overcome challenging environmental shifts that the auto industry is facing, said Toshihiro Mibe, director and representative executive officer of Honda.

“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,” he added.

What of Mitsubishi then? Well, the Japanese automaker and its newly “engaged” compatriots have reached a basic agreement to proceed with discussions for Mitsubishi to become the third member of the possible “alliance.” All three are already part of a MoU signed on August 1 this year focusing on vehicle intelligence and electrification. In a separate joint release, Mitsubishi says it aims to reach a decision on its participation by the end of January 2025.

“In an era of change in the automotive industry, the study between Nissan and Honda about a business integration will accelerate synergy maximisation effects, bringing high value also to the collaborative businesses with Mitsubishi Motors. In order to realise synergies and to make the best use of each company’s strengths, we will also study the best form of cooperation,” commented Takao Kato, director, representative executive officer, president and CEO of Mitsubishi Motors.

Much like the merger between Fiat Chrysler Automobiles (FCA) and PSA in 2021 that resulted in the creation of Stellantis, the potential integration of the two (possibly three) Japanese brands is big news for the global automotive industry. The full merger (including Mitsubishi), if realised, would result in the world’s third-largest auto group by vehicle sales after Toyota and Volkswagen. With this announcement, it is likely Foxconn (also known as Hon Hai Precision Industry) will continue to pause its potential stake purchase in Nissan.

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