Honda and Nissan merger: the companies have signed a memorandum of understanding and invited Mitsubishi to become a future holding company

Japanese carmakers Honda and Nissan have signed a memorandum of understanding that paves the way for a merger of the companies. If the deal goes through, the new holding company will become the third largest carmaker in the world after Toyota and Volkswagen.

Here's What We Know

At a press conference in Tokyo on Monday, representatives from both companies said talks between Honda and Nissan should be completed by June 2025, with the creation of the holding company scheduled for August 2026. Mitsubishi Motors, which has been in an alliance with Nissan since 2016, is also considering participation in the new company. The decision on Mitsubishi's accession will be made in January 2025.

The new concern will have a market capitalisation of $54 billion, and with Mitsubishi - $58 billion. However, even in this case it will be significantly inferior to Toyota, whose value is $287 billion.

The combined corporation (with Mitsubishi) will rank third in the world in terms of annual sales with a result of more than 8 million cars. By comparison, Toyota sold 11.2 million cars in 2023 and Volkswagen sold 9.24 million.

As the Financial Times notes, the merger will benefit Nissan, which is currently in a tight spot. The company recently announced 9,000 job cuts and a 20 per cent reduction in production capacity due to falling sales in China and the US.

A combined Honda and Nissan will be able to invest together in the development of electric cars and software for autonomous vehicles, an industry where both companies are losing ground to rivals from China.

Source: Reuters