Nissan and Honda have signed a memorandum of understanding (MoU) to start discussions that could lead to a merger of the two companies. They said in a statement that they are discussing a ‘business integration between the two companies through the establishment of a joint holding company’.
Nissan and Honda plan to establish, through a joint share transfer, a joint holding company that will be the parent company of both companies. Both Nissan and Honda will be fully owned subsidiaries of the joint holding company.
The MOU between Nissan and Honda is aimed to serve as an option to ‘maintain global competitiveness and for the two companies to continue to deliver more attractive products and services to customers worldwide’.
The move is being driven by the need for both companies to strategically address the challenge to maintain competitiveness and cut costs in the auto industry’s rapid transition from combustion engine vehicles to battery electric vehicles, currently led by Chinese OEMs. The two carmakers – and Mitsubishi Motors – are already collaborating in EV technology, but the MoU promises to deepen such collaboration and raises the possibility of sharing manufacturing capacity, too.
Mitsubishi Motors could also be joining the consolidation and the ‘three companies have agreed to explore the possibility of achieving synergies at an increased level through Mitsubishi Motors’ participation or involvement in the business integration’. Mitsubishi Motors aims to reach its conclusion by the end of January 2025 on the participation or involvement in the business integration between Nissan and Honda.
Nissan and Honda said both companies can aim to integrate their respective management resources such as knowledge, human resources, and technologies; create deeper synergies; enhance the ability to respond to market changes; and expect to improve mid- to long-term corporate value.
Additionally, Nissan and Honda said they aim to further contribute to the development of Japan’s industrial base as a “leading global mobility company” by integrating Nissan and Honda’s four-wheel-vehicle and Honda’s motorcycle and power products businesses, enabling the brands of both companies to become more attractive and to deliver more attractive and innovative products and services to customers worldwide.
Marking the announcement, Nissan Director, President, CEO and Representative Executive Officer Makoto Uchida said: “Today marks a pivotal moment as we begin discussions on business integration that has the potential to shape our future. If realized, I believe that by uniting the strengths of both companies, we can deliver unparalleled value to customers worldwide who appreciate our respective brands. Together, we can create a unique way for them to enjoy cars that neither company could achieve alone.”
Honda Director and Representative Executive Officer Toshihiro Mibe said: “Creation of new mobility value by bringing together the resources including knowledge, talents, and technologies that Honda and Nissan have been developing over the long years is essential to overcome challenging environmental shifts that the auto industry is facing. Honda and Nissan are two companies with distinctive strengths. We are still at the stage of starting our review, and we have not decided on a business integration yet, but in order to find a direction for the possibility of business integration by the end of January 2025, we strive to be the one and only leading company that creates new mobility value through chemical reaction that can only be driven through synthesis of the two teams.”
Potential synergies from the business integration
Nissan and Honda will establish an integration preparatory committee to facilitate a smooth integration and will conduct focused discussions.
Based on the committee’s discussions, as well as the results of due diligence, the companies will examine and analyse more specific synergies.
The expected synergies from the business integration are:
1. Scale advantages by standardizing vehicle platforms
By standardizing the vehicle platforms of both companies across various product segments, the companies expect to create stronger products, reduce costs, enhance development efficiencies, and improve investment efficiencies through standardized production processes.
The integration is projected to increase sales and operational volumes, allowing the companies to reduce development costs per vehicle, including for future digital services, while maximizing profits.
By accelerating the mutual complementation of their global vehicle offerings – including ICE, HEV, PHEV, and EV models – Nissan and Honda will be better positioned to meet diverse customer needs around the world and deliver optimal products, leading to improved customer satisfaction.
2. Enhancement of development capabilities and cost synergies through the integration of R&D functions
In accordance with the MoU to deepen strategic partnership and the joint research agreement on fundamental technologies dated August 1, the two companies have started joint research in fundamental technologies in the area of vehicle platforms for next-generation software-defined vehicles (SDVs), which is the cornerstone of the field of intelligence. After the business integration, both companies will encompass more integrated collaboration across all R&D functions, including fundamental research and vehicle application technology research. This approach, they say, is designed to enable both companies to enhance their technological expertise, achieving both improvements in development capabilities and reductions in development costs through the integration of overlapping functions.
3. Optimizing manufacturing systems and facilities
The companies anticipate that optimizing their manufacturing plants and energy service facilities, combined with improved collaboration through the shared use of production lines, will result in a substantial improvement in capacity utilization leading to a decrease in fixed costs.
4. Strengthening competitive advantages across the supply chain through the integration of purchasing functions
To fully leverage the synergies from optimizing development and production capacity, both companies intend to boost their competitiveness by improving and streamlining purchasing operations and source common parts from the same the supply chain and in collaboration with business partners.
5. Realizing cost synergies through operational efficiency improvements
The companies expect that the integration of systems and back-office operations, along with the upgrade and standardization of operational processes, will drive significant cost reductions.
6. Acquisition of scale advantages through integration in sales finance functions
By integrating relevant areas of sales finance functions of both companies and expanding the scale of operations, the companies aim to provide a range of mobility solutions, including new financial services throughout the vehicle lifecycle, to customers of both organizations.
7. Establishment of a talent foundation for intelligence and electrification
The human resources of the companies are an invaluable asset, and establishing a strong human resource foundation is crucial for the transformation that will come with the business integration. After the integration, increased employee exchanges and technical collaboration between the companies are expected to promote further skill development. Moreover, by leveraging each company’s access to talent markets, attracting exceptional talent will become more attainable.
Method of business integration and stock listing
Nissan and Honda plan to establish, through a joint share transfer, a joint holding company that will be the parent company of both companies. This will be subject to approval at each company’s general meeting of shareholders and obtaining necessary approvals from relevant authorities for this business integration, based on the premise that Nissan’s turnaround actions are steadily executed. Both Nissan and Honda will be fully owned subsidiaries of the joint holding company.
Additionally, the companies plan to continue coexisting and developing the brands held by Honda and Nissan equally.
It is planned that 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.
With the listing of the joint holding company, both Nissan and Honda will become wholly owned subsidiaries of the joint holding company and will be scheduled to be delisted from the TSE. However, shareholders of both companies will continue to be able to trade shares of the joint holding company issued during this share transfer on the TSE.
The listing date of the joint holding company and the delisting date of both Nissan and Honda will be determined in accordance with the regulations of the TSE.
Regarding the organizational structure of the joint holding company, and both companies which will become wholly-owned subsidiaries of the joint holding company after the business integration, the optimal structure for realizing synergies, including the integration of R&D functions, purchasing functions, and manufacturing functions, will be discussed and considered within the integration preparatory committee, with the aim of establishing an organizational structure that enables efficient and highly competitive business operations after the business integration.
“Nissan and Honda start merger talks” was originally created and published by Just Auto, a GlobalData owned brand.
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