Honda and Nissan, once fierce competitors, have initiated discussions that could lead to the formation of the world’s third-largest carmaker by sales, amid growing challenges from Chinese and other global rivals.
Following weeks of speculation, the two companies announced on Monday that they had signed a memorandum of understanding to establish a joint holding company. This move is poised to become the largest domestic merger in Japan’s automotive industry.
Although details remain limited, the proposed deal appears to signify an effective takeover of Nissan by Honda. Honda is expected to appoint the new president and a majority of the board members for the prospective company. Mitsubishi, which already has a partnership with Nissan, is also part of the ongoing discussions. The companies aim to finalize the details by June, with plans to list the joint holding company by August 2026.
Should the deal proceed, it would place the combined entity behind only Toyota and Volkswagen in global vehicle sales. The companies project annual sales of 30-trillion yen (US$191-billion) and an operating profit exceeding 3-trillion yen.
Honda, Japan’s second-largest automaker after Toyota, holds a market capitalization of over US$40-billion, whereas Nissan, ranked third, is valued at approximately US$10-billion.
Carlos Ghosn, former Nissan CEO who is credited with saving the company from bankruptcy in the early 2000s, criticized the potential partnership, calling it illogical from a business perspective. Speaking from Lebanon, where he has been in exile since 2019 after fleeing Japan while on bail for alleged financial misconduct, Ghosn remarked that there is little complementarity between Honda and Nissan, as both excel and struggle in similar areas.
Ghosn further speculated that the deal may be politically motivated, aimed at keeping Nissan under Japanese control. Earlier this year, Taiwanese electronics giant Foxconn reportedly attempted to acquire Nissan to expand its electric vehicle business but was rebuffed.
Despite updated Japanese guidelines in 2023 designed to ease foreign takeovers, resistance to overseas ownership remains strong. For example, Seven & i Holdings, the parent company of 7-Eleven, has fiercely resisted a takeover attempt by Canada’s Alimentation Couche-Tard Inc., with the founding Ito family reportedly considering a bid worth around 9-trillion yen (US$58.7-billion) to take the company private and maintain domestic control.