Nissan, Honda announce plans to merge, creating world’s number 3 automaker

Tokyo: Japanese automakers Honda and Nissan have unveiled plans to merge, forming the world’s third-largest automaker by sales. The companies announced the signing of a memorandum of understanding on Monday, with Mitsubishi Motors, a smaller member of Nissan’s alliance, also agreeing to join talks on the integration.

The merger, if finalised, could result in a giant automaker valued at over $50 billion, based on the combined market capitalisation of the three companies. Together, the new entity would rival Toyota and Germany’s Volkswagen, both leaders in the global automotive market. Nissan, Honda, and Mitsubishi collectively produced about 8 million vehicles in 2023, compared to Toyota’s 11.5 million vehicles. In contrast, Honda made 4 million, Nissan 3.4 million, and Mitsubishi just over 1 million.

“This integration could deliver even greater value to a wider customer base,” said Nissan’s CEO, Makoto Uchida, emphasising the potential for greater scale in a rapidly changing industry. Automakers in Japan have struggled to keep pace with global competitors in the transition to electric vehicles (EVs), prompting the need for consolidation to cut costs and improve efficiency.

The merger also comes amid rumours that Taiwan’s Foxconn, a key partner of Apple, is seeking to collaborate with Nissan, which is part of a broader alliance with Renault and Mitsubishi. While details are still emerging, analysts suggest Honda could benefit from Nissan’s expertise in electric vehicles and hybrid powertrains, as well as its experience in manufacturing truck-based SUVs.

The news follows a challenging period for Nissan, which has faced financial difficulties, including a recent quarterly loss of $61 million and a 6 per cent global workforce reduction. Despite this, its share price has surged following the merger announcement, reflecting investor optimism about the potential deal.