Nissan, Honda Eyes Merger to Form Another Top Automaker

After the rapid adoption of electric vehicles and the upheaval created by EV makers like Tesla and BYD, once-reigning Japanese automakers Honda and Nissan have also embarked on making strides in the electric realm.?

The Japanese car makers have officially entered into talks to establish a third top car company in terms of sales to compete efficiently in the rapidly evolving EV and autonomous driving market.

The Need for Innovation

Honda CEO Toshihiro Mibe stressed the crucial need for increased scale to effectively compete in the evolving electric vehicle and intelligent driving sectors.

He emphasized that achieving greater scale is essential for the companies to effectively compete in the development of new technologies within these sectors. The merger aims to leverage the combined resources and expertise of both companies, enabling significant cost savings, accelerated technological development, and an enhanced market share.

Key Aspects?

• Holding Company Structure: A holding company will be established as the parent entity, with both Honda and Nissan maintaining their independent brands?and stock exchange listings.
• Leadership and Governance: Honda, being the larger company, will nominate the majority of the board members of the merged entity.
• Financial Projections: The combined group is projected to have annual revenue exceeding $191 billion (30 trillion yen) and operating profit surpassing $3 trillion yen.

The merger is expected to result in a company with a market value of roughly $54 billion, with Honda’s contribution constituting the more significant share at $43 billion.

Challenges & Competition

Reports revealed the said discussion to form this merger is likely to conclude in June 2025. The new group has extended an invitation to Mitsubishi, Nissan’s strategic partner, to join the alliance. Mitsubishi is expected to make a decision regarding this offer by the end of January 2025.

Mibe indicated that the integration process is anticipated to be a long-term endeavor, with tangible outcomes not foreseen until 2030 or later.

Reports translated that the proposed merger comes on the heels of Nissan’s recent financial struggles. Mibe acknowledged that some Honda shareholders might interpret the deal as a form of support for Nissan stating that “If Nissan and Honda are unable to stand independently, the business integration discussions will not proceed.”

What do you think about this alliance to form another car giant? Would it be a successful move? Tell us in the comments section.