Tokyo:
Japanese auto giants Honda and Nissan agreed on Monday to start talks on a merger seen as an attempt to catch up with Chinese rivals and Tesla in electric vehicles. Their partnership would create the world's third-largest automaker, expanding the development of electric vehicles and self-driving technology while saving troubled Nissan.
The two companies and Mitsubishi Motors said they had signed a Memorandum of Understanding to begin discussions on integrating their business under a new holding company.
Citing “dramatic changes in the environment surrounding both companies and the automotive industry,” a joint statement said they planned to list the holding company on the Tokyo Stock Exchange in August 2026.
Honda and Nissan – Japan's number two and three carmakers after Toyota – want to close the merger deal in June next year, but it is unlikely to be a marriage of equals.
Honda will nominate the president of the new holding company, whose board will consist largely of Honda executives, their joint statement said.
“Mitsubishi Motors aims to reach a conclusion on the participation or involvement in the business integration between Nissan and Honda by the end of January 2025,” it added. Nissan is the majority shareholder of Mitsubishi Motors.
Moderate consumer spending and intense competition in various markets are making life difficult for many car manufacturers.
Foreign brands have particularly struggled in China, where electric vehicle makers such as BYD are leading the way as demand for less polluting vehicles grows.
China overtook Japan as the top auto exporter last year, helped by government support for electric vehicles.
According to Kyodo News, the partnership between Honda and Nissan could include a manufacturing partnership where they build vehicles in each other's factories.
“We hope that Japanese companies will take steps to respond to these changes and take measures to survive and win amid international competition,” government spokesman Yoshimasa Hayashi said on Monday.
He declined to comment on the merger reports but emphasized the “importance of strengthening competitiveness in areas such as… batteries and software in vehicles.”
Debt-laden Nissan announced thousands of job cuts last month as it reported a 93 percent drop in first-half net profit, making a merger with Honda welcome news.
Kyodo said Honda would ask Nissan to achieve a “V-shaped recovery” in performance as a condition of the merger.
In the meantime, Taiwanese electronics manufacturer Foxconn has also reportedly spotted an opportunity.
Foxconn, which builds devices for technology companies including Apple's iPhones, first unsuccessfully approached Nissan with a bid to acquire a majority stake, according to Bloomberg.
Subsequently, a Taiwanese media outlet said Foxconn's Jun Seki – a former Nissan executive – had visited France to ask Renault to sell its 35 percent stake in Nissan, although reports later said this effort had been put on hold.
Honda and Nissan already agreed in March to explore a strategic partnership in the field of software and components for electric vehicles, among other things. This partnership was joined by Mitsubishi Motors in August.
Nissan has had a turbulent decade, including the 2018 arrest of former boss Carlos Ghosn, who later jumped bail and fled Japan, hiding in a cabinet containing music equipment.
Ghosn told reporters in Tokyo on Monday via video link from Lebanon, where he is at large, that turning to his archrival Honda showed Nissan was in “panic mode.”
While the two companies may be able to find “synergies for the future… I don't see anything obvious in this partnership or alliance,” Ghosn said.
(Except for the headline, this story has not been edited by Our staff and is published from a syndicated feed.)