Rumors of a Merger Between Two Major Japanese Automakers Resurface!

According to reports from Nikkei News, Honda Motor Co(referred to as "Honda") and Nissan Motor Co(referred to as "Nissan") have entered negotiations for a potential merger to better adapt to the rapidly changing global automotive marketSources familiar with the matter have revealed that Honda and Nissan are considering establishing a holding company, with the signing of a memorandum of understanding expected shortlySpecific details regarding the ownership stakes and other related information in the new company will be determined later.

Following the announcement, stock prices for Nissan and Mitsubishi Motors soared; as of the publication of this article, Nissan’s stock increased by 23.7%, reaching the limit-up threshold, while Mitsubishi’s shares gained over 19%. In contrast, Honda’s stock dropped by more than 3%.

Details of the Transaction

Nikkei also reported that Honda and Nissan are planning to incorporate Mitsubishi Motors into the holding company framework

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Currently, Nissan is the largest shareholder of Mitsubishi, holding 24% of its shares.

Should a merger occur among Nissan, Honda, and Mitsubishi, the new entity’s annual vehicle sales would exceed 8 million unitsThis would position the company among the largest car manufacturers globally, although still short of Toyota Motor Corporation’s 11.2 million units sold in 2023 and the 9.2 million units sold by Volkswagen last year.

In response to the reports, Honda stated that it did not issue such newsHonda emphasized that, as previously announced in March and August of this year, discussions regarding possible future collaborations among Honda, Nissan, and Mitsubishi are based on each company's strengths

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As for the contents reported in the media, no decisions have yet been madeAny new developments will be communicated to stakeholders at the appropriate time.

Mitsubishi has also indicated that media reports regarding a potential merger between Nissan and Honda are not based on any official announcements from the company.

There have been indications of a merger between the two companies for some timeHonda’s Executive Vice President Shinji Aoyama had previously disclosed that Honda was indeed considering various options, including a potential merger with NissanHe mentioned that both parties are contemplating the formation of a holding company to operate together, aiming to integrate their resources and strengthen their competitive position within the fiercely competitive automotive industry.

In March 2024, Honda and Nissan announced a partnership focusing on electric vehicle batteries and software, aiming to jointly explore next-generation software-defined vehicle platforms, sharing resources such as motors and inverters for the development of new batteries and electric axes; in August, Honda, Nissan, and Mitsubishi signed a memorandum of understanding to explore collaboration potential in areas like vehicle electrification and software development.

If this merger is successful, it will become the largest acquisition in the automotive industry since the formation of Stellantis from the merger of Fiat Chrysler and Groupe PSA in January 2021.

Surge in Stock Prices of Nissan and Mitsubishi

Upon hearing the news, stocks of both Nissan and Mitsubishi surged; Nissan rose by 23.7%, hitting the limit-up restriction, while Mitsubishi increased by over 19%. On the other hand, Honda shares suffered a decline of over 3%.

Public records reveal that Honda, Nissan, and Mitsubishi are among the leading automotive companies in Japan

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Since its founding in 1948, Honda has produced a diverse range of products, extending its operations across various fields such as cars and motorcycles; Nissan was established in 1933; Mitsubishi Motors became independent from Mitsubishi Heavy Industries in 1970 and remains a core member of the Mitsubishi GroupIn the fiscal year 2023 (from April 2022 to March 2023), Honda sold approximately 3.98 million vehicles globally; Nissan sold 3.37 million vehicles during the same period; and Mitsubishi sold about 780,000 vehicles.

However, in the Chinese market, Japanese brands are facing significant challenges in sales growthFrom January to November 2024, Honda's sales dropped by 30.7%, while Nissan experienced a decline of 10.5% in their Chinese market performance.

The stock performance of both companies has also been underwhelming

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