Honda, Nissan aim to merge under holding company in 2026

TOKYO - Honda Motor Co. and Nissan Motor Co. said Monday they have agreed to begin talks on merging under a holding company in 2026, which would create the world's third-largest automaker group to compete with U.S. and Chinese electric vehicle manufacturers.

Honda and Nissan, Japan's second- and third-largest carmakers by volume, respectively, aim to conclude negotiations in June 2025, while Mitsubishi Motors Corp., Nissan's partner, will decide by the end of next month whether to join the merger, the automakers said.

Each company would continue operating under its own brand within the holding company, which would be listed in August 2026. Honda would appoint the president and a majority of the board members at the new company, they said.

"The industrial landscape has been changing as new players such as Chinese companies are emerging," Honda President Toshihiro Mibe said at a press conference.

The auto industry sees development costs soaring at a time when vehicles are expected to become more connected, autonomous, shared and electric, known as CASE.

"It has become extremely difficult for one company to bear the burden alone for investment for electrification" and software development, Mibe said.

Honda and Nissan aim to share hefty development costs and reduce production expenses by using common components. They are also considering ways to strengthen their product lineups, such as Honda supplying hybrid vehicles to Nissan and streamlining production operations to cut costs further.

EVs are one of the most critical segments for growth with stricter exhaust regulations requiring more zero-emission vehicles. Honda, Nissan and other Japanese automakers have lagged behind competitors such as Tesla Inc. of the United States and China's BYD Co.

The merger would mark a pivotal moment not only for Honda and Nissan but also for the Japanese auto industry amid a rapidly changing business environment.

Honda has pursued an independent growth path without any major alliances since entering the Japanese auto market as its newest player in the 1960s, while Nissan restructured its decades-old partnership with French automaker Renault SA last year.

The new entity would form one of Japan's two largest auto groups, alongside Toyota Motor Corp.'s group.

Combined sales of Honda, Nissan and Mitsubishi Motors topped 8 million vehicles in 2023, compared with 11.23 million vehicles at Toyota and 9.24 million at Volkswagen AG.

The new partnership is critical for struggling Nissan. The automaker will push ahead with its restructuring measures before the two automakers conclude their merger talks, the companies said.

In November, Nissan said it will cut 9,000 jobs worldwide and reduce its global production capacity by 20 percent as it reported a more than 90 percent drop in net profit in the April-September period.

"We hope to grow together rather than one leaning against another," Nissan President Makoto Uchida said at the press conference.

Mibe dismissed the notion that the new alliance is intended to bail out Nissan.

"We will consider how our participation can evolve and maximize synergy among the three companies," Mitsubishi Motors President Takao Kato said.

The Honda-Nissan alliance would be the latest in a series of tie-ups among major automakers seeking to increase competitiveness in the EV business.

Among global automakers, General Motors Co. said in September it would consider a partnership with Hyundai Motor Co. on EVs. Volkswagen said in June it will launch a joint venture with U.S. EV maker Rivian Automotive Inc.

Former Nissan Chairman Carlos Ghosn, speaking at a separate press conference marking the fifth anniversary of his escape to Lebanon from Japan, said the merger plan "cannot work" due to limited potential for synergy between their operations.

"They are strong in the same fields. They are weak in the same fields," he said. "There is duplication everywhere. So industrially, for me, it doesn't make sense."

The decision to explore the merger comes as Taiwanese electronics giant Foxconn, formally known as Hon Hai Precision Industry Co., is in talks with Renault, Nissan's largest shareholder, to acquire some of the French carmaker's shares in the Japanese automaker. Renault plans to sell part of its holdings as part of a new partnership with Nissan.

Some analysts suggest that Nissan chose to merge with Honda to prevent Foxconn from becoming involved in its management. However, the Nissan top executive denied this at the press conference.

Uchida said Nissan will continue to cooperate with Renault on a project-by-project basis.

In a separate announcement, Honda said it will buy back up to 1.1 trillion yen ($7 billion) worth of its own stock, equivalent to about 24 percent of its outstanding shares.

Related coverage:

Honda, Nissan to consider building vehicles at each other's plants

FOCUS: Honda-Nissan merger could zero in on EV development

Foxconn in talks to buy Renault's stake in Nissan