Honda and struggling Nissan have formally announced plans in working towards a merger that would see the coalition become the third largest carmaker in the world by sales. Fellow Nissan Alliance member Mitsubishi will also be invited to sit at the adults table and join in on the unification talks.
Both companies signed a Memorandum of Understanding (MoU) on Monday. Nonetheless, Honda president, Toshihiro Mibe has said that there are “points that need to be studied and discussed but frankly speaking, the possibility of this not being implemented is not zero.”
The union will operate under a joint holding company led by Honda’s management whilst still preserving the fundamentals of each brand. Ideally, the merger would be completed by June and see the joint holding company listed on the Tokyo Stock Exchange by August 2026.
Whispers of a merger hinted that talks begun due to Taiwanese iPhone maker Foxconn intending to purchase shares in Alliance member Renault to tie up with Nissan. Nissan’s CEO Makoto Uchida was quick to shut down these rumours.
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Honda, Nissan and Mitsubishi announced in August plans for component sharing and joint research on autonomous software for EVs.
Nissan’s struggles begun when former chairman Carlos Ghosn was arrested in 2018 on charges of fraud and misuse of company assets. He denied all charges and pulled off a dramatic escape in a music equipment box after bail, fleeing to his native Lebanon.
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Capping off a bleak year that saw a quarterly loss of USD 61 million, Nissan announced it was cutting 9,000 jobs globally and slashing production by 20%. A management reshuffle also saw Uchida take a 50% pay cut for his responsibility in the misfortunes.
Nissan though possesses experience in EVs, especially gas-electric hybrid powertrains, that could benefit Honda. Furthermore, Honda could develop its own body-on-frame SUVs based off the Nissan Armada and Infiniti QX80, something that it glaringly lacks in its North American arsenal.
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If the merger comes to fruition, the coalition could find itself positioned as the world’s third-largest carmaker, with around 8 million units sold in 2023. Honda sold 4 million, Nissan 3.4 million and Mitsubishi with just over 1 million.
Toyota will remain the world’s largest carmaker, having rolled out 11.5 million vehicles in 2023. The Volkswagen Group takes second spot.
While Fitch Ratings (per AP) has lowered Nissan’s credit outlook to ‘negative,’ the carmaker still possesses a solid financial structure with strong cash reserves of USD 9.4 billion.
Ghosn was very vocal about the merger when speaking to Bloomberg. The former chairman said the move indicated Nissan was panicking.
“There is practically no complementarity between the two companies. They are on the same markets. They have the same products. The brands are very similar,” he said.
He added that the Japanese government, specifically the Ministry of Economy, Trade, and Industry, were behind the merger talks.
