Honda, Nissan, Mitsubishi Motors aim to merge in 2026 as talks kick off

Japanese auto giants Honda and Nissan on Monday agreed to launch talks on a merger seen as a bid to catch up with Chinese rivals and Tesla on electric vehicles.

The two firms along with Mitsubishi Motors "have signed a memorandum of understanding to start discussions and considerations toward a business integration between the two companies through the establishment of a joint holding company", a joint statement said.

Honda and Nissan said in the statement that they aim to list a new holding company in August 2026. "Shares of the newly established joint holding company under consideration are planned to be newly listed (technical listing) on the prime market of the Tokyo Stock Exchange... the listing is scheduled for August 2026," their joint statement said.

The presidents of Honda, Nissan and Mitsubishi Motor Corp. - Nissan's junior partner - were seen entering and leaving Japan's transportation ministry on Monday morning to inform officials of their plans to formally kick off merger talks.

A separate report in Yomiuri said the aim is to merge in 2026 and have the holding company as the listed vehicle. Shares in Nissan slipped as much as 2.6%, bringing declines for the year to around 21%. Stock in Honda was trading 2.1% higher. It's down 14.4% since January.

Significant challenges ahead

Honda and Nissan are both facing significant challenges, with the latter in dire financial straits as a deluge of electric and hybrid vehicles from competitors in China forces legacy brands to pool resources.

Nissan is in greater need of a turnaround due to cratering sales in the US and China, which have forced it to slash jobs, cut production capacity and lower annual profit outlook by 70%.

Talks were initially complicated by Taiwanese manufacturer Hon Hai Precision Industry Co., which reportedly expressed an interest in acquiring Nissan. But the iPhone-maker known as Foxconn is pausing its pursuit for now to see how talks between the two Japanese companies unfold, a person familiar with the matter said last week.

An alliance between Honda and Nissan - which could also include Nissan's junior partner Mitsubishi Motors - would effectively split Japan's automobile industry down the middle, pitting the trio against Toyota Motor Corp. and its partnerships with Mazda Motor Corp., Subaru Corp. and Suzuki Motor Corp.

Honda and Nissan had already begun laying the groundwork for a technical partnership earlier this year, announcing plans with Mitsubishi Motors to co-develop batteries, software and other EV technologies.

- with inputs from Bloomberg, AFP