Honda and Nissan have recently revealed that they, along with Mitsubishi Motors, have signed a memorandum of understanding showing their interest in merging the three companies. This collaboration will be overseen by a joint holding company. By merging, these automakers aim to combine their resources and share technologies and manufacturing capabilities, positioning themselves better against their rivals.
Industry Changes
According to the official press release, these discussions come amid significant transformations in the automotive sector. The companies mentioned the shift towards electric vehicles and the increasing trend of direct sales rather than going through independent dealers. Mitsubishi plans to make a decision by the end of January 2025 about its involvement in the talks. Meanwhile, Honda and Nissan are optimistic about the potential synergies that could arise from their merger, believing it would help them reach a wider audience.
Future Plans
The goal is to complete the merger agreement by June 2025 and finalize the contract by August 2026. Initially, Honda will take the lead in managing the joint venture, which isn't surprising as Honda's market capitalization is more than four times that of Nissan. The joint venture is projected to have a market value exceeding $52 billion, positioning it just behind Toyota and VW in global sales. However, Carlos Ghosn, the former CEO of Nissan, has expressed skepticism about the merger, telling Bloomberg that it appears to be an "act of desperation" for Nissan, as finding synergies between Honda and Nissan could be quite challenging. Currently, Nissan is facing significant declines in profits, leading to numerous layoffs.
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