Japanese multinational automobile manufacturers Nissan Motor and Honda Motor have officially began merger talks to maintain global competitiveness.
The duo said in a statement on Monday that they have signed a memorandum of understanding (MOU) to start discussions and considerations toward a business integration between the two companies through the establishment of a joint holding company.
The MOU 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.
If the business integration can be realized, 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 can 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.
It is noted that to further accelerate their efforts toward achieving a carbon-neutral society and a zero-traffic-fatality society, Nissan and Honda signed an MOU on March 15 regarding a strategic partnership for the era of vehicle intelligence and electrification.
Since then, the two companies have held discussions aimed at collaboration in various fields.
On August 1, both companies signed a further MOU to deepen the framework of the strategic partnership.
The companies also announced that they had agreed to carry out joint research in fundamental technologies in the area of platforms for next-generation software-defined vehicles (SDVs), particularly in the areas crucial for intelligence and electrification, to advance focused discussions toward more concrete collaboration.
Throughout the process, Nissan and Honda have engaged in discussions in consideration of various possibilities and options.
At the same time, the business environment for both companies and the wider automotive industry has rapidly changed and the speed of technological innovation has continued to accelerate.
“Today marks a pivotal moment as we begin discussions on business integration that has the potential to shape our future,” said Makoto Uchida, Nissan Director, President, Chief Executive Officer and Representative Executive Officer.
“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,” he added.
Meanwhile, 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,” he added.
According to the statement, 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 analyze more specific synergies.
By promptly realizing the synergies from the integration, Nissan and Honda can aim to become a world-class mobility company with sales revenue exceeding 30 trillion yen and operating profit of more than 3 trillion yen ($19.16 billion).
The expected synergies from the business integration at this time are: scale advantages by standardizing vehicle platforms; enhancement of development capabilities and cost synergies through the integration of research and development (R&D) functions; optimizing manufacturing systems and facilities; strengthening competitive advantages across the supply chain through the integration of purchasing functions; realizing cost synergies through operational efficiency improvements; acquisition of scale advantages through integration in sales finance functions; Establishment of a talent foundation for intelligence and electrification.
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 internal combustion engines (ICE), hybrid electric vehicle (HEV), plug-in hybrid electric vehicle (PHEV), and electric vehicle (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.
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 is expected to enable both companies to efficiently and swiftly enhance their technological expertise, achieving both improvements in development capabilities and reductions in development costs through the integration of overlapping functions.
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.
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.
The companies also expect that the integration of systems and back-office operations, along with the upgrade and standardization of operational processes, will drive significant cost reductions.
By integrating relevant areas of sales finance functions of both companies and expanding the scale of operations, the companies also aim to provide a range of mobility solutions, including new financial services throughout the vehicle lifecycle, to customers of both organizations.
It is noted that 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.
Thus, 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.
Nissan and Honda, with the result of the consideration, plan to establish, through a joint share transfer, a joint holding company that will be the parent company of both companies.
Additionally, the companies plan to continue coexisting and developing the brands held by Honda and Nissan equally.
The listing of the newly established joint holding company is scheduled for August 2026.