Japanese automakers Honda and Nissan said today they have officially started merger talks and are aiming to close a deal by June 2025. Fellow Japanese carmaker Mitsubishi is also considering joining the transaction.
Honda and Nissan have signed an initial agreement to discuss a merger, including by setting up a joint holding company under which the current brands would operate as subsidiaries. Honda will appoint a majority of the holding company's board members including its president or representative director, Honda's president Toshihiro Mibe said on 23 December.
Mitsubishi will make a final decision on whether to participate in the negotiations before the end of January 2025.
A Honda representative told Argus on 18 December that the firm was exploring a possible merger with Nissan.
Collaboration on the electrification of automobiles is one of the major reasons for the merger, according to Honda and Nissan.
The firms agreed a strategic partnership in March to work together on electrification, studying possible areas of co-operation in developing automotive software platforms, core components relating to electric vehicles (EVs) and complementary products.
Honda aims to electrify all its new cars by 2040 and is investing ¥10 trillion ($64bn) by 2030 partly to reduce battery costs, which account for around 30-40pc of the total cost of producing EVs, Mibe said in May.
Honda's combined sales of EVs and fuel cell EVs (FCEVs) more than doubled to around 42,000 units in 2023, according to the company. But this only accounts for around 1pc of its total sales. Further investments on electrification by a single manufacturer are not feasible, Mibe said on 23 December.
Nissan produced 3.4mn vehicles in 2023. It does not provide a precise breakdown for global EV sales, although it said in August 2023 that such sales had surpassed 1mn units since its first delivery in 2010.
This is dwarfed by foreign EV competitors, including Chinese producer BYD and US manufacturer Tesla, whose sales exceeded 3mn and 1.8mn units respectively in 2023 alone.
The merger is also designed to optimise facilities owned by Honda and Nissan, Mibe said. But he denied that it would lead to a reduction in production capacity or asset cuts. The companies instead aim to expand output, Mibe added, although he did not disclose a detailed plan.
Nissan is struggling to make a profit, partly because of weak EV demand. The company's net profit slumped by 94pc on the year to ¥19.2bn in April-September, prompting it to cut global production capacity, including for EVs, by 20pc to around 4mn units/yr.
Nissan's financial struggles will not affect its collaboration with Honda, but it needs to accelerate its financial recovery, Nissan chief executive Makoto Uchida said on 7 November.
But Mibe suggested on 23 December that Nissan's financial situation could cause the proposed merger to be scrapped.
Japan's trade and industry ministry (Meti) has yet to make any official comment on the merger talks. But Meti minister Yoji Muto said on 20 December that restructuring the industry would generally help increase the value of private entity and promote innovation.
