Honda and Nissan, two of Japan’s largest automakers, are set to begin discussions about a possible merger amid fierce competition in the rapidly developing field of electric vehicles.
Both companies issued near-identical statements confirming that they are exploring ways to deepen collaboration and will update stakeholders in due course. While neither has announced merger talks directly, reports from Japanese media outlet Nikkei suggest a major strategic shift could be on the horizon.
Facing mounting pressure from Chinese electric vehicle manufacturers and strained profit margins in their electrification efforts, Honda and Nissan have been forging closer ties in recent months. In March this year, the two companies agreed to cooperate on developing electric vehicles, and by August they had expanded their partnership to include electric vehicle batteries, e-axles, and other critical technologies.
Insiders indicate that the two automakers are considering putting themselves under a single holding company, streamlining operations and potentially merging Mitsubishi Motors – of which Nissan is the largest shareholder with a 24% stake – into the new entity. This development could reshape the global automotive landscape and mark the largest merger in the sector since Fiat Chrysler joined with PSA in 2021 to create Stellantis.
A joint operation between Honda and Nissan would respond to the growing challenges faced by traditional automakers. Honda and Nissan together sold 7.4 million vehicles worldwide last year, but their influence is waning in China’s booming electric vehicle market. China accounted for nearly 70% of global electric vehicle sales last November, as local brands such as BYD surged ahead, putting established players under pressure to consolidate and pool resources for research and development, manufacturing and supply chains.
Nissan’s latest commitments suggest the company remains determined to meet net-zero emissions targets in Europe and the UK, despite market volatility. Plans to retool its Sunderland plant into an electric vehicle production hub and build a third mega-factory underscore Nissan’s ambition, while Honda also has significant interests in accelerating its electrification strategy.
If Honda and Nissan complete the merger, it would mark one of the most significant reorganizations in the industry since Stellantis was founded two years ago. The Stellantis consolidation was driven in part by similar market pressures and cost-saving imperatives. Amid these changing dynamics, global companies, including General Motors and Ford, have been scaling back their investments in electric vehicles due to weak charging infrastructure, higher borrowing costs, and uncertainty in consumer uptake.
As the auto industry continues to change at dizzying speed, the potential merger between Honda and Nissan demonstrates how legacy automakers are seeking to adapt, join forces, and remain competitive in a market that increasingly rewards scale, innovation and quick response to new consumer demands.