Honda and Nissan, Japan’s second- and third-largest carmakers respectively, are entering formal negotiations for a potential mega-merger to strengthen their position in the increasingly competitive global electric vehicle (EV) market, according to a report by Nikkei.
The talks come as both companies face mounting pressure from fast-growing Chinese automakers and established global players dominating the EV sector. In 2023, Honda and Nissan combined for 7.4 million vehicle sales but struggled to match the rapid growth of rivals like BYD and Li Auto, whose affordable and advanced EV offerings have disrupted traditional automakers.
The two companies have already taken steps to collaborate, announcing in March 2024 their decision to jointly develop EV technology. At the time, Nissan CEO Makoto Uchida acknowledged the need for bold action, stating: “Emerging players are very aggressive and are making inroads at incredible speed. We cannot win the competition as long as we stick to conventional wisdom and a traditional approach.”
The merger discussions reportedly aim to establish a single holding company that would unify the operations of Honda and Nissan. Details such as ownership stakes and leadership structures are still under negotiation. Mitsubishi Motors, where Nissan holds a 24% stake, is also expected to be part of the newly combined entity.
If completed, the deal would be the largest automotive merger since the $52 billion union of Fiat Chrysler and PSA Group in 2021, which created Stellantis, one of the largest global auto groups.
The proposed merger highlights the challenges facing traditional automakers as they transition from internal combustion engines to electric vehicles. The shift requires massive investments in research, battery technology, and manufacturing infrastructure at a time when profits are falling and demand in key markets like Europe is slowing.
Chinese automakers have rapidly gained market share with affordable, tech-driven EVs, leveraging domestic government support and a robust supply chain. This has forced legacy automakers to rethink their strategies to maintain competitiveness.
