Nissan and Honda announced the official merger talks on December 23 to build the world’s third-largest automaker by sales. Toshihiro Mibe, CEO of Honda, said in a press conference that the companies needed a larger scale to compete with the advanced technology in the electric and autonomous vehicle industry, providing an edge that will only be possible under the merger.
The parent company will be formed for the Honda-Nissan merger that will have a hold on all the operations, to be listed on the Tokyo Stock Exchange. Honda will have the power to nominate most of the executive board members. The Nissan-Honda merger has the great potential to deliver an annual revenue of 30 trillion yen ($191.4 billion) and an operating profit of 3 trillion yen.
Honda and Nissan Explore Merger Talks
Honda and Nissan have officially announced the merger talks, which are set to conclude in June 2025. Mibe said, “The deal would aim to share intelligence and resources and deliver economies of scale and synergies while protecting both brands.” As per the official announcement, if approved, the merger will be a long-term project that will make visible progress only by 2030 or later.
The motive behind this integration is to move forward amid intense global competition set by EV makers like Tesla and China’s BYD. Honda sold 3.98 million vehicles and Nissan 3.37 million, and together, they could become the world’s third-largest automaker group, trailing Toyota Group’s 11.23 million and Volkswagen Group’s 9.23 million vehicles sold last year.
Honda and Nissan Stock Performance
Nissan stock prices spiked around 24% while Honda stocks dipped by 5% amid merger talks last week. However, Honda stocks gained 2.11% and Nissan stocks slipped by 0.74% on December 23. The stocks are expected to spike following the official announcement of the merger.
Nissan and Honda Turnaround Plan
Honda CEO Mibe said on Monday that some shareholders might view the deal as Honda backing Nissan, but emphasized that the merger relies on Nissan completing its recovery plan. He added, “If Nissan and Honda can’t stand on their own, the merger talks won’t move forward.”
Recently, Nissan announced 9,000 job cuts following its poor quarterly performance, reducing its global production capacity to fifth. As per Kyodo News, Honda would ask Nissan to show a “V-shaped recovery” by the first half of 2025 to go ahead with the merger.
Nissan CEO Makoto Uchida reassured reporters that the integration discussions didn’t mean they had abandoned their turnaround plan. Instead, it’s about ensuring long-term competitiveness. “We need to focus on future growth and size, which will come through partnerships,” he said.
