In the joint statement made by the companies, it was stated that Japanese automobile manufacturers signed a memorandum of understanding for merger talks under a joint holding company.
Mitsubishi, which owns 24.5 percent of Nissan’s shares, also signed the memorandum of understanding and will consider joining the newly formed group by the end of January.
The companies aim to complete merger negotiations by June 2025, establish a holding company by August 2026, and have the shares of both companies listed on the stock market.
On the other hand, Honda announced that it will buy back shares worth 1.1 trillion yen ($7 billion) next year.
Honda Chairman of the Board Toshihiro Mibe said at the press conference on the subject that companies need a larger budget to compete in the development of new technologies in the field of electric vehicles and autonomous driving.
Stating that the agreement in question will protect the Honda and Nissan brands, Mibe stated that the agreement aims to share resources and provide synergy.
Mibe stated that the two companies would reach a sales figure of 30 trillion yen ($191.4 billion) through the potential merger, and the operating profit would exceed 3 trillion yen ($19 billion).
“Both companies will continue as wholly owned subsidiaries of the joint holding company with their own brands,” Mibe said. he said.
The new company will be the world’s third largest automaker
Japan’s second and third largest automakers, Honda and Nissan, were having difficulty competing with Chinese electric vehicle manufacturers such as US Tesla and BYD.
Nissan, which could not achieve the sales success it wanted in markets such as China and the USA, decided to lay off 9 thousand people and reduce its production capacity in November.
The new company, which will be established by the merger of Honda and Nissan, will be the world’s third largest automobile manufacturer in terms of vehicle production volume, after Toyota and Volkswagen.
The deal would also be the largest merger in the industry since the $52 billion merger between Fiat Chrysler and PSA in 2021, which created Stellantis.
Last year, Honda and Nissan sold 3.98 million and 3.37 million vehicles worldwide, respectively.
While Toyota maintained its first place for the fourth consecutive year by selling 11.23 million vehicles last year, the Japanese manufacturer was followed by German Volkswagen with 9.24 million vehicles.
Global automakers are increasing their mergers or collaborations as they struggle to find funds to cover the increasing costs of electric vehicle development due to the huge resources required to develop technology such as expensive batteries and autonomous driving.
Honda and Nissan agreed in March this year to launch a feasibility study for a strategic partnership in electric vehicle production and software technologies in order to reduce costs and increase competitiveness, and Mitsubishi Motors announced that it participated in the negotiations in August.
