by Maki Shiraki
TOKYO (Reuters) – Nissan and Honda announced on Monday the signing of a memorandum of understanding to merge by 2026, which would create the world’s third-largest automaker and mark a turning point for the sector in Japan at the time. that competition from Tesla and Chinese brands is keen.
The two Japanese car manufacturers, who have said they want to conclude their negotiations around June 2025 and come together in a holding company by August 2026, are targeting a combined turnover of 30,000 billion yen (183.4 billion euros) and an operating profit of more than 3,000 billion yen. Following the creation of the holding company, the shares of the two groups will be delisted.
A merger between Nissan and Honda would create the third largest automobile group in the world in terms of vehicles sold, behind Toyota and Volkswagen.
“The rise of Chinese automakers and new players has significantly changed the automotive sector,” Honda CEO Toshihiro Mibe said at the joint press conference in Tokyo with Nissan and Mitsubishi Motors.
“We must strengthen our capabilities to combat them by 2030, otherwise we will be defeated,” he added.
Traditional car manufacturers are suffering from competition from players like Tesla and Chinese groups like BYD.
A Nissan-Honda alliance would allow the two Japanese companies to gain scale and share resources.
Mitsubishi Motors, of which Nissan is the main shareholder, is also considering joining the future holding company and will make a decision on the matter by the end of January, the three Japanese manufacturers indicated.
Honda, Japan’s second-largest automaker behind Toyota, has a market capitalization of around $40 billion, while Nissan, which ranks third, is valued at around $10 billion.
Last month, Nissan announced a plan to cut 9,000 jobs and 20% of its global production capacity after a fall in sales in China and the United States, its key markets.
Honda, for its part, published a lower-than-expected quarterly profit in November amid a collapse in its sales in China. The solidity of the Japanese group’s activities in motorcycles and hybrid vehicles has, however, enabled it to maintain a relatively stable financial base.
“This is not a rescue of Nissan,” assured Toshihiro Mibe, adding that the recovery of Nissan’s activities was a “precondition” for the merger.
As part of the memorandum of understanding, Honda will appoint the majority of members of the board of directors of the future holding company.
RENAULT WILL CONSIDER ALL OPTIONS
Like other foreign automakers, Honda and Nissan have lost ground in China, the world’s largest auto market, to local manufacturers, which offer electric and hybrid vehicles with innovative software.
A merger between Nissan and Honda would mark the biggest upheaval in the sector since the 2021 merger between Fiat Chrysler Automobiles and PSA which gave birth to Stellantis as part of a $52 billion operation.
By integrating Mitsubishi Motors, Nissan’s partner, global sales of the new unit would increase to more than 8 million vehicles. The third largest automobile group in the world is currently the South Korean Hyundai and its affiliate Kia.
Renault, Nissan’s largest shareholder, told Reuters it was studying the implications of a merger between the two Japanese manufacturers.
“Discussions between Nissan and Honda are still at an early stage. As the main shareholder of Nissan, Renault Group will discuss with Nissan and consider all possible options in the best interest of Renault Group and its stakeholders,” the group said. to the diamond.
At Monday’s press conference, Nissan Chief Executive Makoto Uchida said Nissan would continue to work with Renault on a “project” basis whenever there are synergies.
Toshihiro Mibe, for his part, assured that the proposed merger with Nissan would not change relations between Honda and General Motors.
Before Nissan and Honda’s announcement, sources told Reuters that the two groups had planned to meet their boards of directors on Monday.
During an online press conference from Lebanon where he is now a refugee, former Nissan CEO Carlos Ghosn was critical of the viability of a possible merger between Honda and Nissan, believing that this project “didn’t make sense.”
On the Tokyo Stock Exchange, Honda shares ended Monday with a gain of 3.82%, while Nissan shares advanced 1.58% and that of Mitsubishi Motors 5.25%, against an increase of 1. 19% for the Nikkei index.
In Paris, around 12:40 GMT, Renault shares fell 0.21% compared to a gain of 0.14% for the CAC 40 index and a drop of 1.07% for the automobile sector in Europe.
(Reporting by Kantaro Komiya and Maki Shiraki; with contributions from Sakura Murakami, Dominique Patton in Paris; written by Kantaro Komiya and David Dolan; Claude Chendjou, edited by Augustin Turpin and Kate Entringer)
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