Honda, Nissan Hold Merger Talks

Honda and Nissan, two of Japan's leading automakers, are in discussions to merge into a holding company, aiming to create a powerful alliance capable of competing with global automotive leaders like Toyota and Chinese electric vehicle (EV) manufacturers.

Sources familiar with the matter disclosed the talks to Bloomberg and Reuters.

Honda spokesperson confirmed the merger discussions, stating, "We are exploring various possibilities for future collaboration, including reports about a potential merger. However, no decision has been made yet."

The proposed merger would enable Honda and Nissan to pool resources and strengthen their competitiveness in the global EV market.

The discussions come amid intensifying pressure from Tesla and Chinese EV companies, as well as declining vehicle demand in Europe and the US.

News of the potential merger has already made waves. Nissan’s stock surged by over 20% on Wednesday, prompting the Tokyo Stock Exchange to temporarily halt trading on the stock.

In contrast, Honda’s shares fell by nearly 3%, reflecting concerns over Nissan's financial struggles, including workforce reductions and declining profits.

The Nikkei, Japan’s financial newspaper, also reported that Mitsubishi Motors, where Nissan holds a 24% stake, might be included in the proposed holding company. If successful, the new entity would rank among the largest global automakers.

The discussions align with Honda and Nissan’s shared need to cut costs and accelerate EV development. Both companies face challenges in adapting to the EV-driven transformation of the automotive industry.

Honda’s market valuation stands at ¥5.95 trillion ($38.8 billion), significantly higher than Nissan’s ¥1.17 trillion ($7.6 billion). Combined, the two companies sold 7.4 million vehicles globally in 2023 but continue to face competition from EV leaders, especially in China.

If successful, the merger would mark the largest industry consolidation since Fiat Chrysler and PSA’s $52 billion merger in 2021, which formed Stellantis.

Renault, Nissan’s key shareholder, has declined to comment on the talks. Both Honda and Nissan issued statements emphasizing ongoing discussions to explore "various possibilities for future cooperation."