Nissan, Honda Formalize Discussions For Merger Framework

Confirming an earlier report, Nissan and Honda have announced that they’re formally engaging in talks to discuss the pros, cons, and terms of a potential merger. While nothing has been decided yet, a framework is emerging, with the two brands stating that they’d merge via a joint holding company and that Mitsubishi may become a third partner.

In a joint statement, Nissan and Honda explained that they have signed a memorandum of understanding “aimed to serve as an option to maintain global competitiveness.” That’s another way of saying that the car industry and the regulations shaping it are changing at a rapid pace, and keeping up is mind-bogglingly expensive. Details of the merger will be worked out over the course of the next several months, but what we do know is that the two brands will become subsidiaries of said holding company, and Honda would appoint a majority of that company’s board seats as well as its president.

From a practical perspective, the releases issued by the two automakers suggest we’re likely to see a Kia-Hyundai type of tie-up, where the two companies shack up to share architectures, factories, research and engineering resources, and materials. Nissan and Honda also singled out the integration of various systems and back-office operations as a way to significantly reduce costs.

Nissan, which split with long-time partner Renault in 2023, and Honda already collaborate in several areas. In March 2024, they formed a partnership to pool their resources in the fields of electrification and vehicle intelligence. In August 2024, they agreed to expand the burgeoning tie-up to include platforms for next-generation software-defined vehicles, and they laid the foundations for the full-on merger talks.

“We are still at the stage of starting our review, and we have not decided on a business integration yet,” stressed Toshihiro Mibe, Honda’s director and representative executive office. He added that Honda and Nissan hope to “find a direction for the possibility of business integration by the end of January 2025.”

The third brand in these discussions, Mitsubishi, faces a critical decision in the next month: The brand’s executives will need to decide whether to sign on or stay on the bench by January 2025. (With a 34% stake, Nissan stands out as Mitsubishi’s largest shareholder.) As for Renault, it issued a statement to acknowledge the talks and remind Nissan that despite parting ways, it remains the brand’s largest shareholder, and indicated it will “consider all options based on the best interest of the group and its stakeholders.”

There’s a lot at stake. Nissan and Honda would become the third-largest car company in terms of sales if they end up joining forces, behind Volkswagen and Toyota and ahead of General Motors and Ford. But the sheer scale of the transaction makes it easier said than done. They’ll decide whether to consummate the deal by June 2025, with a target of completing the effort in August 2026.