Japanese car giants Honda and Nissan confirm plans to merge

[EnterpriseSovereign]

Japanese car giants Honda and Nissan confirm plans to merge

Japanese car makers, Honda and Nissan, have confirmed they are in talks over a possible merger, forming the world’s third-largest carmaker in terms of annual sales.

The companies confirmed that Honda and Nissan had signed an agreement on Monday to integrate their businesses, and that smaller Nissan alliance member Mitsubishi Motors was also considering joining.

The merger would make them the third-largest car maker by sales, behind only Japanese rival Toyota Motor Corp and Germany's Volkswagen AG.

Even after a merger Toyota, which rolled out 11.5 million vehicles in 2023, would remain the leading Japanese automaker.

If they join, the three smaller companies would make about 8 million vehicles. In 2023, Honda made 4 million and Nissan produced 3.4 million. Mitsubishi Motors made just over 1 million.

Nissan, Honda and Mitsubishi announced in August that they would share components for electric vehicles like batteries and jointly research software for autonomous driving to adapt better to dramatic changes centred around electrification, following a preliminary agreement between Nissan and Honda set in March.

Last year, Nissan announced it would produce two new electric vehicle models at its UK factory in Sunderland, securing the future of 6,000 jobs in the northeast of England.

Honda's president, Toshihiro Mibe, said Honda and Nissan will pursue unifying their operations under a joint holding company.

Honda will initially lead the new management, retaining the principles and brands of each company. The aim is to have a formal merger agreement by June and to complete the deal and list the holding company on the Tokyo Stock Exchange by August 2026, he said.

No dollar value was given and the formal talks are just starting, Mr Mibe said.

Japanese automakers face a strong challenge from their Chinese rivals and Tesla as they make inroads into markets at home and abroad.

They have lagged behind their big rivals in electric vehicles and are trying to cut costs and make up for lost time.

A merger could result in a huge worth of more than $50 billion (£39.77bn) based on the market capitalisation of all three automakers.

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Together, Honda, Nissan and Mitsubishi would gain scale to compete with Toyota Motor Corp, and with Germany’s Volkswagen AG. Toyota has technology partnerships with Japan’s Mazda Motor Corp and Subaru Corp.

News of a possible merger surfaced earlier this month, with unconfirmed reports saying that the talks on closer collaboration partly were driven by aspirations of Taiwan iPhone maker Foxconn to tie up with Nissan by buying shares from the Japan company's other alliance partner, Renault SA of France.

Nissan's CEO Makoto Uchida said there had been no direct approach to his company from Foxconn. He also acknowledged that Nissan's situation was “severe.”

The merger reflects an industry-wide trend toward consolidation.

At a routine briefing Monday, Cabinet Secretary Yoshimasa Hayashi said he would not comment on details of the automakers' plans, but said Japanese companies need to stay competitive in the fast-changing market.

“As the business environment surrounding the automobile industry largely changes, with competitiveness in storage batteries and software is increasingly important, we expect measures needed to survive international competition will be taken," Hayashi said.

Unite national officer for automotive, Steve Bush, said: “Unite will be monitoring the progress of the merger talks closely and seeking assurances from Nissan about any potential impact on its UK operations.”