Honda and Nissan Plan Merger by 2026

On Monday, Honda and Nissan signed an agreement on timelines and plans, confirming that merger talks are underway.

Japanese news media outlet Nikkei said the merger is to fend off competition in the electric vehicle sector.

The signed memorandum of understanding indicates that both automakers plan to delist from the Tokyo Stock Exchange in July or August of 2026. After that, the two companies' shares will be held by a joint holding company.

The automakers' combined sales volume in 2023 will exceed 8 million units; Toyota and Volkswagen Group will sell 11.2 million and 9.2 million units, respectively, in 2023.

The two companies already have a close relationship. Honda and Nissan have been collaborating on EV and software development since March, and Mitsubishi joined the partnership in August. Nissan already owns a 34% stake in Mitsubishi, and Nissan and Mitsubishi also share vehicle platforms and technology through their existing alliance, which also includes Renault. Mitsubishi has collaborated with Honda in the past, most recently in the area of EV battery leasing through a joint venture called Altona.

Japanese automakers are also catching up in the EV race after years of promoting hydrogen fuel cells as an alternative, although they are consolidating to cut costs. Toyota, Mazda, and Subaru also announced plans in May to cooperate on internal combustion engines.

These moves are aimed at fending off competition from international rivals, particularly China, which last year surpassed Japan as the world's largest auto exporter.

Nissan, in particular, is struggling. In October, the company announced plans to lay off some 9,000 workers, or 6.7% of its global workforce, and cut production capacity by 20%, citing declining sales, primarily in the United States and China. The Financial Times also reported in November that a source warned that Nissan had only 12 to 14 months to survive. The merger would solve Nissan's current financial problems.

Honda and Nissan emphasized that the merger would go beyond software and powertrains. The joint venture would bring economies of scale to manufacturing systems and facilities, along with optimization opportunities. It would also strengthen the purchasing power of both companies. Standardization of vehicle platforms would also be appreciated, but details were not disclosed.

This article was updated on December 23 as Honda and Nissan confirmed merger negotiations and timelines.