In a landmark move for Japan’s auto industry, Honda and Nissan have announced plans to merge by 2026. This historic decision, unveiled at a joint press conference in Tokyo, underscores the mounting pressure legacy automakers face from Chinese electric vehicle (EV) giants and Tesla’s relentless dominance.
The merger will create the world’s third-largest auto group by vehicle sales, trailing only Toyota and Volkswagen. If Mitsubishi Motors joins the alliance, the trio’s global sales could exceed 8 million vehicles, catapulting the group ahead of Hyundai and Kia.
A Bold Bet on Survival
“The rise of Chinese automakers and new players has changed the car industry quite a lot,” Honda CEO Toshihiro Mibe said. “We have to build up capabilities to fight with them by 2030, otherwise we’ll be beaten.”
This isn’t just a merger—it’s a battle plan. By uniting their resources, Honda and Nissan aim for combined sales of 30 trillion yen ($191 billion) and an operating profit exceeding 3 trillion yen. Their goal? To not just survive but thrive in the face of cutthroat competition.
Why This Merger Matters
The auto industry is in the midst of a seismic shift. Electrification, autonomous driving, and software innovation are redefining the market. Chinese EV makers like BYD are rapidly outpacing traditional carmakers in China, the world’s largest auto market. Honda and Nissan’s sales in the region have taken a hit, with Nissan even announcing plans to slash 9,000 jobs and cut production capacity by 20%.
Honda, known for its stability thanks to its motorcycle and hybrid businesses, has also felt the sting of slowing sales in China. Yet, Honda’s CEO is adamant: “This is not a rescue of Nissan. Nissan’s business turnaround is a prerequisite for the merger.”
What’s Next?
The companies aim to finalize discussions by June 2025, with a holding company to be established by August 2026. Honda, the larger of the two with a market capitalization over $40 billion—four times that of Nissan—will hold a majority on the board.
While Honda has longstanding collaborations with General Motors, and Nissan continues its partnership with Renault, this merger represents a decisive pivot to strengthen their footing in an unforgiving market.
Doubts from the Past
Not everyone is convinced. Former Nissan chairman Carlos Ghosn, speaking from Lebanon, called the alliance “unlikely to succeed,” arguing that Honda and Nissan are not complementary. Meanwhile, Renault, Nissan’s largest shareholder, expressed openness to the merger but emphasized discussions were ongoing.
A Ripple Effect
The announcement sent ripples through the stock market. Honda’s shares jumped 3.8%, Nissan’s rose 1.6%, and Mitsubishi Motors saw a 5.3% gain. The benchmark Nikkei index also closed up 1.2%.
A New Era for Japan’s Auto Industry
This merger marks the biggest shake-up in the global auto industry since the Fiat Chrysler-PSA merger in 2021. It’s not just about scale—it’s about survival in a world dominated by EVs and software.
For Honda and Nissan, the road ahead is challenging, but this bold step signals their determination to lead the charge into the future of mobility.
