Nissan, Honda announce merger, creating world’s third-largest carmaker 

Japan’s Honda and Nissan are planning a merger, which would create the world’s third-largest carmaker as the industry pivots away from fossil fuels.

The company’s two presidents, Toshihiro Mibe of Honda and Makoto Uchida of Nissan, signed a memorandum of understanding on Monday, projecting the establishment of a holding company by August 2026, which could potentially position them third in the market after Toyota and Volkswagen.

Honda, currently Japan’s second-largest carmaker, is widely viewed as the only national partner able to rescue Nissan, which has struggled since former chairman Carlos Ghosn was arrested on charges of fraud and misuse of company assets in 2018.

Ghosn, who denied the charges and fled to Lebanon after being released on bail, derided the planned merger as a “desperate move” in a video call to reporters on Monday.

Nissan, valued at about $10bn, said in November it was slashing 9,000 jobs, or 6 percent of its global workforce, and reducing its global production capacity by 20 percent after reporting a quarterly loss of 9.3 billion yen ($60m).

But the merger, which would also include smaller Nissan alliance member Mitsubishi Motors, could result in a behemoth worth more than $50bn based on the market capitalisation of all three automakers.

Honda’s Mibe said the company, currently valued at more than $40bn, would initially lead the new management of the merged entity.

Carmakers in Japan have lagged behind their big rivals in electric vehicles and are trying to cut costs and make up for lost time.

The three companies, which announced in August that they would share components for electric vehicles (EVs) like batteries and jointly research software for autonomous driving, would make about 8 million vehicles.

In 2023, Honda made 4 million and Nissan produced 3.4 million. Mitsubishi Motors made just more than 1 million.

Sam Fiorani, vice president of AutoForecast Solutions, a global automotive forecaster, said Nissan’s experience building batteries, electric vehicles and gas-electric hybrid powertrains could help Honda develop its own EVs and next-gen hybrids.

The integration of the two storied Japanese brands would mark the biggest reshaping in the global auto industry since Fiat Chrysler Automobiles and PSA merged in 2021 to create Stellantis in a $52bn deal.