2024 ended with the what was the biggest announcement in the global automotive scene—the merger of Honda and Nissan—which will naturally carry Mitsubishi—into a strategic partnership that would form what could be the world’s third largest automaker behind Toyota and Volkswagen by August 2026.
The announcement made in an online press conference last December 20 formalized a plan that went way back to March 15, 2024 when Honda and Nissan initiated discussions aimed at sharing technologies for electric vehicles. Honda was lagging behind the other Japanese automakers in terms of both battery electric vehicles (BEV) and hybrid electrics before it launched its hybrid Civic and CR-V initially in Japan.
But the March collaboration was tuned to enhance their competitive edge against Tesla and BYD, which have been rapidly innovating in the electric vehicle (EV) market. BYD had won one of the ten slots of the prestigious Japan Car of the Year Awards before 2024 ended.
Discussions culminate in a merger
As discussions progressed, Mitsubishi officially joined the framework of the Honda-Nissan alliance by late July 2024. By August 1, 2024, the partnership had evolved significantly with the signing of a Memorandum of Understanding (MOU) between Honda and Nissan. This agreement formalized their commitment to explore synergies that now includes vehicle intelligence, battery and charging technologies as well as autonomous driving, aside from propulsions systems.
The culmination of these discussions occurred on December 23, 2024, when the three companies announced the establishment of a joint holding company. Responding to a question during the press conference, Nissan’s President and CEO Makoto Uchida said that the companies would “maintain each brand’s identity while maximizing synergies across their operations.”
Not just badge engineered
The ideas is that the three brands would operate independently under this new structure but would benefit from shared resources and technologies. In later communications from the Nissan and Honda press offices, it was clarified that the companies will implement a strategy of platform sharing, enabling them to develop distinct models while utilizing a common architecture for production.
This is different from the previous collaborations that resulted in cross-badged vehicles. In the Philippines for example, the Nissan Livina is essentially a re-badged Mitsubishi Xpander. Coming soon will be the Nissan NV350 Urvan to be renamed by Mitsubishi Motors Philippines Corporation (MMPC) as the L350 van.
In a press statement the merging companies said that “the collaboration will develop models that are fundamentally distinct and cater to different segments while sharing a common platform,” which is expected to enhance cost-effectiveness by optimizing research and development functions and streamlining manufacturing processes.
The effect on Renault
The merger also holds significant implications for Renault, which holds a substantial stake in Nissan. Given that Renault has been part of a longstanding alliance with Nissan since 1999, the new dynamics introduced by this merger could lead to strategic shifts within their relationship. Renault may need to reassess its position and strategies in light of the strengthened partnership that will result from the merger.
Analysts suggest that Renault could face challenges in maintaining its influence within Nissan’s structure if the Japanese automaker focus shifts toward enhancing synergies with its new partners. The financial implications of this merger are substantial; experts predict that the combined market capitalization of the merger could exceed $54B.
“The automobile industry is in a period of transformation said to occur once in a century. We expect that the combination of technologies and knowledge cultivated by Nissan and Honda, as well as the strength and experience of Mitsubishi Motors, will enable us to more quickly resolve various issues related to electrification and intelligence on a global scale, and help lead societal reforms as a top runner,” Toshihiro Mibe, President and Representative Executive Officer, Honda Motor Co. of Japan commented.
What Ghosn says
Former Nissan CEO Carlos Ghosn characterized the discussions for the merger as indicative of the company being in “panic mode.” He made this statement during an online press conference three days before the merger announcement.
Later in an interview on Bloomberg, he expressed the same skepticism regarding the practicality and strategic rationale behind the merger. Ghosn described the move as a “desperate” attempt by Nissan to address its ongoing challenges, noting that it is “not a pragmatic trade” due to the difficulties in finding synergies between the two companies, especially in the fields of engineering in which Honda and Nissan are very powerful in.
Ghosn pointed out that Nissan and Honda operate in similar markets with overlapping product lines, which raises concerns about redundancy rather than collaboration. “There is practically no complementarity here,” Ghosn said in a CNBC interview.
He also suggested that external pressures from Japan’s Ministry of Economy, Trade and Industry (METI) could be influencing Honda’s willingness to engage in the merger discussions, indicating that METI might be trying to combine “Nissan’s short-term issues with Honda’s long-term vision.”
