Honda, Nissan and Mitsubishi have confirmed they are in talks over a possible three-way merger as the Japanese companies struggle with falling sales and competition from Chinese brands.
The companies confirmed on Monday that Honda and Nissan had agreed to “start consideration towards a business integration through the establishment of a joint holding company”, and that Mitsubishi would also decide on joining by the end of January.
The merger would combine Japan’s second- and third-largest carmakers, and add the smaller Mitsubishi, in a defensive effort to join forces as the automotive industry goes through its biggest ever period of upheaval. It would create the world’s third-largest carmaker in terms of annual sales, behind only Japanese rival Toyota and Germany’s Volkswagen.
While Toyota has remained relatively financially resilient because of its early lead in hybrid vehicles, Japan’s other carmakers are struggling to come up with the money to invest in the switch away from polluting petrol and diesel to cleaner electric vehicles. Hybrids, which combine a petrol engine and a smaller battery, remain less expensive to produce for manufacturers.
At the same time, Chinese manufacturers such as BYD and SAIC have aggressively targeted electric cars as a way of grabbing a much bigger share of the global car market. China’s Foxconn, which makes iPhones under a contract with America’s Apple, had reportedly started early discussions about an approach for either Honda or Nissan, prompting accelerated merger talks.
Honda’s market value is 6.74tn yen (£34bn), compared with 1.67tn yen for Nissan and 717bn yen for Mitsubishi. Honda sold 3.8m cars in 2023, although it has been much more efficient than Nissan, which is worth a quarter of its rival despite selling 3m cars last year. Mitsubishi sold 700,000 cars in 2023.
Nissan has been in crisis mode for several years amid falling profits and the turmoil after the arrest of its former chief executive Carlos Ghosn in 2018.
Ghosn fled Japanese house arrest a year later, smuggled out of the country in a musical instrument box with the help of former special forces operatives.
Speaking from Lebanon, where he has lived since, Ghosn on Monday said the merger plans did “not make sense” and were unlikely to succeed, according to Reuters. He had led a semi-formal alliance between Nissan, Renault and Mitsubishi to try to achieve global scale, but he argued that Honda and Nissan were too similar to achieve much benefit.
“From an industrial point of view, there is duplication everywhere,” Ghosn said.
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However, the three companies said the talks would respond to “the dramatic changes in the environment surrounding both companies and the automotive industry”.
Toshihiro Mibe, the Honda chief executive, said a change like this in the industry only came around every 100 years – suggesting that the switch to electric cars is as fundamental as the beginnings of the mass-market sale of cars.
He said that Nissan and Honda would “clarify the possibility of business integration by around the end of January in line with the consideration of Mitsubishi Motors”.
Makoto Uchida, the Nissan chief executive, said: “Honda and Nissan have begun considering a business integration, and will study the creation of significant synergies between the two companies in a wide range of fields.”
