Nissan and Honda are poised to set out more details on Monday of plans for the biggest domestic merger in Japanese automotive history, which would create the world’s third-biggest carmaker by sales and fortify both companies against the rise of Chinese competitors.
Honda and Nissan, the number-two and number-three Japanese carmakers, aim to hammer out the merger’s full details by June 2025 and complete it the following year, according to two people close to the companies.
On Monday, the companies will sign a memorandum of understanding to enter into merger talks, in a step towards what many analysts and investors view as long overdue consolidation in the Japanese car industry.
Discussions centre on the idea of placing both carmakers under a holding company, the people close to the groups said. It would be led by Honda, which is about four times bigger than Nissan in terms of market capitalisation.
The holding company structure could eventually allow for the entry into the group of Mitsubishi Motors, the Japanese carmaker that has been in an alliance with Nissan since 2016.
Honda and Nissan have discussed their outline plans with representatives of Japan’s Ministry of Economy, Trade and Industry, according to government officials. The ministry raised the idea of a Honda-Nissan merger in 2020.
Ministry officials said they were agnostic on which companies they favoured as survivors but noted that the government’s wider mission included the protection of Japan’s industrial base, meaning it broadly supported a deal that appeared to preserve that.
The combined group, were it to include Mitsubishi, would rank behind domestic rival Toyota and Germany’s Volkswagen in terms of annual vehicle sales, at more than 8mn units.
Analysts said a deal should be viewed as a rescue of Nissan but added that the merged company would achieve the greater scale needed to invest more heavily in electric vehicles and software for autonomous driving — areas in which both have fallen behind global rivals.
It marks the latest step in automotive sector consolidation as the industry undergoes sweeping change. A deal would be the largest in the sector since Stellantis was formed from the merger of France’s PSA and Fiat Chrysler in 2021.
The talks between the companies have evolved more quickly towards a full-blown merger than had been expected when the pair signed agreements to collaborate on electric car and software collaboration in March and August of this year.
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