Japanese car manufacturers Honda and Nissan are in preparations to start talks on the grounds of forming a new holding company. The two companies are reportedly looking for mergers in a bid to gain better ground in the swiftly changing global automobile market.
As a result, Honda and Nissan will merge into a single entity under a unified holding company. Additionally, Nissan currently holds a 24% stake in Mitsubishi Motors, which will also be integrated into the new company as part of the consolidation process. Collectively, the combined entity will achieve annual sales exceeding 8 million units, positioning it among the largest automakers globally, though still ranked behind Toyota and Volkswagen.
Honda has clarified that the merger proposal has not been made public, emphasizing that it is exploring various collaborative opportunities with Nissan to leverage each other’s strengths. Similarly, Nissan has stated that updates regarding the potential merger will be provided at an appropriate time. This development follows several months of strategic alliances between Honda and Nissan, focused on automotive and software collaboration. With this partnership now confirmed, significant efforts are being directed towards surpassing the current dominance of Chinese and U.S. electric vehicle manufacturers, including Tesla.
It is a time when the industry is being vocal about consolidation in the automobile industry. Some of the technologies that have upped the cost in terms of research and development include an increase in electric vehicles, tightening of emission regulations, and autonomous driving thus, most companies feel that mergers and acquisitions would keep them ahead of the game. This would be the largest deal ever to have been made since Fiat Chrysler and PSA Group joined forces in 2021 to form the Stellantis, if the deal gets through. Specialists believe it is a trend that enables automobile manufacturers to share the inflated costs for transitioning to electrified autos and to compete for a shaken market. Shares of Honda advanced about 1% in New York trading, while Nissan rose more than 11% as investors bet on potential for the deal.