Honda, Nissan Discuss Potential Merger to Rival Toyota

Honda Motor Co. and Nissan Motor Co. are reportedly in early discussions about a potential merger aimed at creating a formidable rival to Toyota Motor Corp. in Japan. According to sources familiar with the matter, the move could enable the two automakers to consolidate resources and compete more effectively on a global scale.

These discussions, which remain preliminary, have already impacted the stock market. Nissan’s shares surged by 24 per cent during trading, marking their largest intraday increase in history. Conversely, Honda’s shares dipped by 3.4 per cent amidst speculation.

Executive Vice President of Honda, Shinji Aoyama, addressed the media on Wednesday, acknowledging the ongoing discussions but refraining from providing specifics or a timeline for any decisions. Options reportedly under consideration include a full merger, a capital tie-up, or the creation of a joint holding company.

Sources indicate that one possible strategy involves establishing a new holding entity to oversee the operations of both companies. The scope of this potential deal could even extend to include Mitsubishi Motors Corp., which already has equity ties with Nissan. Notably, Mitsubishi’s shares rose by 17 per cent in anticipation of this possibility.

Industry experts believe that this potential merger would effectively create two dominant automotive groups in Japan: one led by Toyota and the other comprising Honda, Nissan, and Mitsubishi.

The consolidation is expected to provide these companies with greater financial and technological resources, enabling them to compete against global giants such as Tesla and emerging Chinese electric vehicle (EV) manufacturers.

“This merger would significantly strengthen both players,” stated Vivek Vaidya, Senior Vice President of Mobility at Frost & Sullivan. “The combined entity would offer a full spectrum of automotive capabilities.”

The talks also signify a strategic shift for Honda and Nissan, as both companies have recently scaled back long-standing partnerships with global automakers. Nissan has reduced its ties with France’s Renault SA, while Honda has pulled back from its collaboration with General Motors Co.

Earlier this year, Honda and Nissan had already begun collaborating on EV battery technologies and software development. Honda CEO Toshihiro Mibe had hinted at the potential for a deeper partnership during those talks.

If a merger materializes, it would likely address some of Nissan’s ongoing financial challenges while positioning the new entity as a key player in the fast-growing EV market. According to analysts, this deal could enhance competitiveness against Tesla and other automakers leading the EV sector.

While the companies have not provided an official timeline, Japanese broadcaster TBS has suggested an announcement might occur as early as December 23. Analysts caution that these discussions may not result in a finalized agreement, given the complexities involved.

The Japanese automotive sector has been closely watching these developments. Bloomberg Intelligence auto analyst Tatsuo Yoshida noted, “A successful merger could provide much-needed stability for both companies while signaling a new era of collaboration in the industry.”