Honda, Nissan begin merger talks to form world's 3rd-largest automaker
What's the story
Honda and Nissan, two of Japan's top automakers, are in talks for a merger. The companies have also announced their plans to form a joint holding company.
If successful, the merger would create the world's third-largest automaker by vehicle sales, behind Toyota and Volkswagen.
The companies intend to finalize their talks by June 2025, with the aim of forming a holding company by August 2026.
Financial goals
Merger aims to boost sales and profit
The proposed merger between Honda and Nissan seeks to achieve combined sales of ¥30 trillion ($191 billion) and an operating profit of more than ¥3 trillion.
The potential merger with Mitsubishi Motors could further boost the Japanese group's global sales to over eight million cars. This would exceed the current third-largest group, South Korea's Hyundai and Kia.
Honda, Japan's second-largest automaker after Toyota, has a market cap of over $40 billion while Nissan is valued at some $10 billion.
Leadership structure
Honda to lead post-merger holding company's board
Post-merger, Honda will appoint the majority of the board members for the new holding company.
This merger marks a major shift in the global auto industry, its biggest restructuring since Fiat Chrysler Automobiles and PSA merged in 2021 to form Stellantis in a $52 billion deal.
The two companies have been exploring ways to strengthen their partnership, including considering cooperation on electrification and software development.
Market struggles
Honda and Nissan face challenges in China
Both Honda and Nissan have struggled in China, the world's largest car market. They have ceded ground to local brands such as BYD which manufacture electric and hybrid cars with advanced software.
Last month, Nissan announced plans to cut 9,000 jobs and reduce its global production capacity by 20% after witnessing sales declines in key markets such as China and the US.
Merger skepticism
Former Nissan chairman doubts success of merger
Former Nissan Chairman Carlos Ghosn cast doubt on the success of the Honda-Nissan merger during an online press conference with the Foreign Correspondents Club of Japan.
He said he didn't think the two automakers were complementary.
Ghosn is a fugitive in Japan after jumping bail and fleeing to Lebanon after his 2018 arrest for financial misconduct, which plunged Nissan into a crisis.