Honda and Nissan are reportedly in talks to deepen collaboration, with the possibility of a full merger on the table. If completed, the combined group would produce 7.4 million vehicles annually, ranking it as the world’s third-largest automaker, just behind Toyota and Volkswagen.
The talks also include setting up a joint holding company to consolidate efforts in EV and technology development, aimed at tackling the fierce competition from Tesla, BYD, and other EV disruptors.
EV Pressure Triggers Strategic Realignment
Both automakers face mounting challenges:
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Nissan has just announced a $2.6 billion cost-cutting plan, including layoffs and production cuts, following slumping sales in the U.S. and China.
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Honda, while financially stronger, has underperformed in the EV segment and is expected to face weaker cash flow in the coming year.
In this context, a partnership—or even a merger—is seen as a defensive move to accelerate innovation and reduce operational redundancy.
Market Response: Positive for Nissan, Mixed for Honda
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Nissan shares surged 24% in Tokyo, while Honda dropped 3%.
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Mitsubishi Motors, 24% owned by Nissan, jumped 20%, on expectations of indirect benefits.
Yet, analysts caution that a merger would face:
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Cultural friction, given the companies' distinct management philosophies;
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Strategic misalignment, as Honda focuses on R&D while Nissan is scaling back;
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Geopolitical headwinds, especially potential scrutiny in the U.S. over auto tariffs and foreign investments.
Upcoming Joint Press Conference to Reveal More
A joint announcement is expected on Monday, which may clarify the form of cooperation—whether it's joint ventures, holding company formation, or a timeline for a full merger.
Whatever the outcome, this development signals a broader shake-up in Japan’s auto industry, potentially sparking a new wave of consolidation globally in response to the EV transition.