Nissan and Honda will merge into a new holding company, while Mitsubishi has a year to consider its options.

Japanese automotive giants Nissan and Honda have signed a memorandum of understanding that outlines a potential merger through the establishment of a joint holding company. The process is expected to be completed by August 2026, as stated in a joint press release.

In the holding company, Honda will have greater influence, appointing the majority of directors and selecting the president. Shares of the new company will be traded on the Tokyo Stock Exchange, while Nissan and Honda plan to delist. Nonetheless, the brands of both companies will remain on the market.

The creation of the holding company will enable:

• standardization of automotive platforms;
• integration of research and development;
• optimization of production capacities;
• enhanced competitiveness in the supply chain;
• the establishment of a strong talent pool.

Mitsubishi Motors may join the new alliance. The company is expected to make a decision regarding participation by the end of January 2025.

According to Bloomberg, the agreement could significantly alter the Japanese automotive industry, creating a formidable competitor for Toyota Motor in the domestic market and for Chinese manufacturers such as BYD and Geely on the international stage.

The merger is also aimed at addressing the challenges faced by companies due to the global shift towards electric vehicles and hybrid powertrains, as well as the gradual phase-out of internal combustion engine vehicles.

Honda's CEO Toshihiro Mibe remarked that such changes in the automotive industry "happen once in a hundred years."

The union of Nissan and Honda has the potential to create a new center of influence in the global automotive industry, providing technological advantages and stability in rapidly changing conditions.