Following a long much-touted rumour or discussion, Japanese automakers Honda and Nissan have announced plans to merge, creating the world’s third-largest automaker by sales. The two companies signed a memorandum of understanding on Monday. However, the announcement expected to mark a significant shift in the industry as it transitions away from fossil fuels to embrace electrification.
Mitsubishi Motors, a smaller partner in the Nissan alliance, has also joined the discussions to integrate its business with Honda and Nissan. If finalized, the merger would position the group just behind Toyota and Volkswagen in global vehicle sales, allowing them to better compete with Tesla and Chinese electric vehicle (EV) manufacturers.
The merger would create a combined entity valued at over $50 billion, based on the current market capitalizations of the three automakers. Honda, Japan’s second-largest automaker after Toyota, holds a market capitalization exceeding $40 billion, while Nissan is valued at $10 billion.
Together, the three companies would produce approximately 8 million vehicles annually. In comparison, Toyota remains Japan’s largest automaker, producing 11.5 million vehicles in 2023. Honda manufactured 4 million vehicles last year, Nissan produced 3.4 million, and Mitsubishi Motors accounted for just over 1 million.
The merger would not only bring financial scale but also the ability to pool resources for technological advancements, giving the group an edge against competitors.
Collaboration On Electric Vehicles And Software
Earlier this year, Honda, Nissan, and Mitsubishi announced plans to share EV components, including batteries, and conduct joint research on autonomous driving software. This collaboration aligns with the dramatic industry-wide shift toward electrification and aims to address the growing dominance of EV-focused companies.
“The merger discussions represent a collective effort to adapt to a rapidly evolving market,” said a spokesperson from Honda. “Together, we can better address challenges like electrification and autonomous driving.”
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Impact On The Global Automotive Market
If successful, the merger will help the Honda-Nissan-Mitsubishi group challenge global giants like Toyota, Volkswagen, and Tesla. Analysts believe this consolidation is crucial for Japanese automakers, who have lagged behind competitors in the EV market.
Toyota, which has technology collaborations with Mazda and Subaru, will remain the leader in Japan even after the merger. However, the new alliance will bring much-needed competition to the forefront as the industry continues its rapid transformation.
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