Nissan Motor President and CEO Makoto Uchida (L) and Honda Motor Director and Representative Executive Officer Toshihiro Mibe hold a press conference Monday to announce that the two car giants are in official talks regarding a mega-merger in which Nissan strategic partner Mitsubishi is also invited to participate. Photo by Franck Robichon/EPA-EFE
Japan’s Honda and Nissan said Monday they had embarked on formal merger talks that would create the third-largest car manufacturer globally with sales of as much as $191.4 billion and more than $19 billion profit.
Announcing the negotiations, Toshihiro Mibe, CEO of the larger Honda, told a news conference in Tokyo that the merger would provide “greater scale” to deliver advances in electric vehicle technology and software integration necessary to compete in the global auto market. Advertisement
Mibe said the tie-up, which Nissan strategic partner Mitsubishi is also invited to join, would provide “an edge that will not be possible under the current collaboration framework” to take advantage of a once-in-a-century revolution in the sector.
Mitsubishi was expected to make its decision by the end of January, Honda said in a news release.
“At this time of change in the automobile industry, which is said to occur once every 100 years, we hope that Mitsubishi Motors’ participation in the business integration discussions of Nissan and Honda will lead to further social change, and that we will be able to become a leading company in creating new value in mobility through business integration,” said Mibe. Advertisement
“Nissan and Honda will start the discussion from today onwards with an aim to clarify the possibility of business integration by around the end of January in line with the consideration of Mitsubishi Motors.”
Mibe, who said the companies would aim to reach a deal by June and set up a parent company the following month that would be listed on the Tokyo Stock Exchange, stressed that the marriage was an enterprise with a mid-to-long-term horizon that was not expected to show measurable gains until 2030 at the earliest.
He insisted Honda was not bailing out Nissan, the world’s ninth-largest carmaker, which is battling “a severe situation” after first-half profit plunged more than 93% to just $122.4 million, prompting it to slash capacity by a fifth and lay off 9,000 workers.
The deal was, Mibe said, “based on the assumption that Nissan completes its turnaround action.”
“If Nissan and Honda fail to stand on their own feet the business integration talks will not come to fruition,” he said.
Nissan CEO Makoto Uchida said the consolidation talks should not be interpreted as the company “giving up on a turnaround” but as a way to secure future competitiveness through “significant synergies in a wide range of fields.” Advertisement
“After doing this turnaround action for future development, future growth, we need to look at ultimate size and growth. This growth will be through partnerships,” he added.
“It is significant that Nissan’s partner, Mitsubishi Motors, is also involved in these discussions. We anticipate that if this integration comes to fruition, we will be able to deliver even greater value to a wider customer base.”
Nissan, which was taken over by France’s Renault in 2000, restructured their tie-up in a major 2023 shake-up that significantly curtailed Renault’s controlling interest in Nissan.
Renault relinquished almost 30% of its stake in Nissan in an effort to reconfigure the coalition’s shareholdings amid a shifting global economic landscape buffeted by inflation and weak consumer demand.
