Honda and Nissan pursue merger, aim to rival EV leaders

Japanese automakers Honda and Nissan announced plans to pursue a merger that would create the world's third-largest automotive company, with Mitsubishi Motors also joining the discussions. The proposed consolidation comes as Japanese manufacturers struggle to catch up with Tesla and Chinese rivals in the electric vehicle market.

Honda's president Toshihiro Mibe revealed plans to unify operations under a joint holding company, with Honda initially leading management while maintaining each company's distinct brands and principles. The companies aim to reach a formal merger agreement by June and complete the deal with a Tokyo Stock Exchange listing by August 2026.

The merged entity would produce approximately eight million vehicles annually, combining Honda's four million, Nissan's 3.4 million, and Mitsubishi's one million units. However, this would still trail Toyota's 11.5 million vehicle output in 2023.

The merger reflects mounting pressure on Japanese automakers as China claimed the position of world's top auto exporter in 2023. The Chinese market has seen hybrids and EVs account for over half of car sales this year, highlighting the urgent need for Japanese manufacturers to accelerate their electric vehicle strategies.

Former Nissan chairman Carlos Ghosn criticized the merger as a desperate move. However, industry experts note potential synergies, with Nissan's experience in batteries and EVs potentially benefiting Honda's development programs.

The deal faces several hurdles, with Mibe acknowledging implementation isn't guaranteed. Nissan's recent challenges include a 9,000-job reduction announcement and a quarterly loss of 9.3 billion yen. The merger reflects an industry-wide trend toward consolidation as automakers adapt to the rapid transition to electric vehicles and changing market dynamics.