TOKYO (AP) — Honda and Nissan have agreed to explore a merger and create a joint holding company, they announced Monday, creating the world’s third-largest automaker and marking a shift in an industry experiencing deep turmoil.
The two companies would aim for combined sales of 30 trillion yen ($191 billion) and operating profit of more than 3 trillion yen through the potential merger, they said in a statement.
Their goal was to conclude negotiations around June 2025 and then create a holding company until August 2026, when shares in either company would cease trading.
The consolidation would create the world’s third-largest car in terms of vehicle sales after Toyota and Volkswagen, as classic carmakers face challenging situations from Tesla and its Chinese rivals.
Honda, Japan’s second-largest automaker after Toyota, has a market capitalization of more than $40 billion, while third-placed Nissan is valued at around $10 billion.
Honda will appoint the majority of the holding company’s board, it said.
The integration of the two prominent Japanese brands would mark the biggest global car overhaul since Fiat Chrysler Automobiles and PSA merged in 2021 to create Stellantis in a $52 billion deal.
Combining with Mitsubishi Motors would take the Japanese group’s global sales to more than 8 million cars. The current No 3 group is South Korea’s Hyundai and Kia.
Like other foreign carmakers, Honda and Nissan have lost ground in the world’s biggest market China amid the rise of BYD and other local brands that make electric and hybrid cars loaded with innovative software.
French carmaker Renault, Nissan’s largest shareholder, is in principle open to a deal and would know all the implications of an alliance, sources said.
Shares of Honda ended the day up 3. 8%, Nissan 1. 6% and Mitsubishi Motors 5. 3% after the main points of the planned merger were revealed, while the benchmark Nikkei index rose 1 . 2%.
Reuters