Honda, Nissan, and Mitsubishi are exploring a merger to counter declining sales and the rising electrification costs. This move follows years of declining profitability for Nissan, culminating in a 73% drop in first-quarter 2024 net profit. Nissan's market share has also eroded, particularly in the US electric vehicle market, holding a mere 2.4% share. To address this, Nissan recently announced a restructuring plan involving job cuts and capacity reductions.
A combined entity—led by Honda—could generate significant revenue and operating profit. However, past auto industry mergers have often been unsuccessful due to integration challenges and cultural clashes. This merger aims to avoid these pitfalls by prioritizing a slower integration process and maintaining a holding company structure.
While immediate synergies may be limited, the long-term benefits include reduced capital costs, shared research and development in electrification and software, and access to each other's technological strengths. Nissan can leverage Honda's hybrid technology, while Honda can explore Nissan's platforms. Mitsubishi—currently 40% owned by Nissan—will decide whether it will participate in January.
The merger is expected to be finalized by June 2026, with the holding company established by August of the same year. This timeline allows Nissan to complete its restructuring. Both companies will be delisted from the Tokyo Stock Exchange and become subsidiaries of the new holding company.
This move comes amidst growing competition from Tesla and other nontraditional players in the EV market. While concerns remain about potential cultural clashes, the companies believe this merger is necessary to navigate the evolving automotive landscape and stay competitive.