Honda Motor Co. and Nissan Motor Co., Japan’s second and third-largest automakers respectively, are in discussions to merge, aiming to establish the world’s third-largest automotive group by volume. This strategic move seeks to enhance their competitiveness in the rapidly expanding electric vehicle (EV) market, currently dominated by companies like Tesla Inc. and China’s BYD Co.
The proposed merger would involve creating a holding company, potentially elevating the combined entity to rival industry leaders such as Toyota Motor Corp. and Volkswagen AG. Including Mitsubishi Motors Corp., a partner of Nissan, the alliance’s combined sales could reach approximately 8 million vehicles.
In March, Honda and Nissan initiated a feasibility study on a strategic partnership focusing on EV production and software technologies to reduce costs and bolster competitiveness. Mitsubishi Motors joined these discussions in August. At a press conference in August, Honda President Toshihiro Mibe indicated that while the talks did not initially involve a capital tie-up, he did not rule out such a possibility in the future.
Global automakers are facing significant financial challenges due to the high costs associated with EV development, including expensive batteries and substantial resources required for software advancements like autonomous driving functions. Honda, traditionally known for in-house development, has recently increased collaborations with companies such as Sony Group Corp. and General Motors Co. Nissan, having restructured its long-standing capital alliance with Renault SA to reduce the French automaker’s influence, is also exploring ways to enhance its market position.
Both Honda and Nissan have experienced declining sales in China, where local brands offering more affordable EVs are capturing market share from Japanese manufacturers. In response, Honda recently lowered its net profit forecast for the current fiscal year to 950 billion yen (US$6.2 billion).
While the automakers have stated they are considering various possibilities for future collaboration, no definitive decisions have been made at this time.
