Honda and Nissan Sign Memorandum of Understanding for Merger, Set to Become Third-Largest Automaker

Japanese automotive giants Honda and Nissan have signed a Memorandum of Understanding (MoU) on Monday to merge, with Mitsubishi also set to join the process. This merger, expected to be completed by August 2026, could position the new entity as the third-largest automaker in the world, following Toyota and Volkswagen.

Honda President Toshihiro Mibe and Nissan CEO Makoto Uchida signed the agreement, which outlines the creation of a holding company. The merger aims to streamline operations and reduce costs, as the three companies look to strengthen their position in the increasingly competitive global automotive market.

Honda, currently Japan’s second-largest automaker, is widely viewed as a potential savior for Nissan, which has been struggling since the 2018 arrest of former chairman Carlos Ghosn over charges of asset misappropriation and fraud. Ghosn, who denied the charges, fled to Lebanon after being released on bail. In a video call with journalists on Monday, he called the proposed merger a disappointing move.

Nissan, valued at approximately $10 billion, announced in November that it would cut 9,000 jobs—about 6% of its global workforce—and reduce its global production capacity by 20%, following a quarterly loss of 9.3 billion yen ($60 million). However, with Mitsubishi Motors—a smaller member of the Nissan Alliance—joining the merger, the combined market capitalization of the three automakers could exceed $50 billion.

Toshihiro Mibe emphasized that Honda, with a market value of over $40 billion, would initially lead the merged entity’s new management structure. The companies are hoping that the merger will help them cut costs and reduce wasted time, especially as they face stiff competition in the electric vehicle (EV) market.

Japanese automakers have been lagging behind their major rivals in the EV sector, and this merger is seen as an effort to catch up. The three companies had previously announced plans in August to collaborate on electric vehicle components, such as batteries, and to jointly develop research software for autonomous driving. Together, they aim to produce around 8 million vehicles.

In 2023, Honda produced 4 million vehicles, Nissan 3.4 million, and Mitsubishi Motors produced only 1 million vehicles. According to Sam Fiorani, Vice President of AutoForecast Solutions, Nissan’s expertise in battery technology, electric vehicles, and gasoline-electric hybrid powertrains could be beneficial for Honda as they work on developing next-generation EVs and hybrids.

This merger marks a significant shift in the Japanese automotive industry, as Honda, Nissan, and Mitsubishi seek to navigate the rapidly evolving automotive landscape and strengthen their global position in the electric and hybrid vehicle markets.