Honda and Nissan to merge: what to know

Honda and Nissan plan to merge under a holding company with the top executives chosen by Honda in a historic reshuffling of Japan’s auto industry meant to keep the country’s second- and third-largest players competitive amid a global onslaught of new competitors and technologies. Mitsubishi Motors, partly owned by Nissan, will decide by the end of January whether to join the new partnership. The CEOs of all three companies announced the new framework at an afternoon news conference on Dec. 23 in Tokyo, with Honda CEO Toshihiro Mibe in the center, flanked by his counterparts. The companies said they will now negotiate details. Read Ad Age’s Best of 2024 stories here “We have the potential to be a world-class, leading company in new mobility,” Mibe said. “By 2030, we need the artillery to compete on the battlefield. So, we are starting today.” Honda, Japan’s No. 2 automaker, and Nissan aim to finalize an agreement by next June and establish the holding company by August 2026. They plan to take the new entity public around that time, pending investor approval at extraordinary shareholder meetings planned for around April 2026. Both Honda Motor Co. and Nissan Motor Co. will be delisted from the Tokyo Stock Exchange and will become subsidiaries of the new holding company. Honda is expected to nominate the majority of directors and the president of the new company. The final share transfer ratio will be decided later and be based upon share prices, among other factors. Still undecided is the name and headquarters of the new holding company. In the U.S., Nissan has long used Omnicom for creative and media under a multi-agency set-up called Nissan United. Nissan-owned Infiniti uses Publicis Groupe for global creative. RPA handles Honda’s advertising in the U.S. Nissan is the world’s 60th-largest global ad spender, while Honda ranks 63rd, acording to the Ad Age Datacenter. Nissan is undergoing marketing leadership changes, with Allyson Witherspoon in November taking on the U.S. chief marketing officer role. Witherspoon, who held the position less than two years ago, retained her current role as corporate VP of global marketing, brand and merchandising for Nissan Motor Co. Mibe pitched the agreement as a way to sharpen the companies’ competitive edge on everything from production and vehicle R&D to sales financing, electrification and software development. The combined operations won’t be a quick fix, Mibe cautioned. The first outcomes will start to manifest only before the end of the decade, with the big payoffs coming after 2030. A combined Honda and Nissan will be able to generate annual revenue exceeding ¥30 trillion ($181.84 billion) and operating profit exceeding ¥3 trillion ($19.18 billion), the companies predicted. Mibe said the new combination was not a bailout of Nissan. Rather, he said, Nissan and Honda will be expected to stabilize their own businesses before joining hands. Embattled Nissan, fighting long-term sales decline, massive debt and crumbling profits, launched a revival plan in November that slashes global capacity and cuts 9,000 jobs worldwide. Any finalized deal will hinge on Nissan getting its house in order first, Mibe said. In the meantime, Honda is initiating large buybacks of its own stock to bolster its share price, Mibe said. Honda wants to buy back up to 20% of its outstanding. Honda is acting now before regulatory restrictions on buybacks take effect during merger talks. “It’s not going to stay like is is today forever,” Mibe said. The long-term goal is not downsizing and rationalizing operations but rather growth and bigger scale, he added. As an example of a potential impact on the U.S. market, Mibe dangled the possibility of delivering a hybrid pickup truck, leveraging Honda’s strength in gasoline-electric powertrains and Nissan’s experience in body-on-frame trucks. “We aren’t thinking about just carving out, carving out, carving out and leaving only the good parts,” Mibe said. “We want to think about options that lead us to bigger scale.” Mibe and his Nissan counterpart Makoto Uchida said Honda will take the lead in setting up the holding company because its market capital is bigger than Nissan’s. Before news of the talks broke this month, Nissan’s share price had tumbled 35% this year, as the company struggled with a litany of financial problems including a net loss in the latest quarter. “We will definitely be able to address all the challenges ahead and deliver significant new value that we have never seen in the past,” Uchida said. “We will be among the top class.” Sign up for Ad Age newsletters From influencer marketing to agencies, get the latest news and analysis delivered to your inbox Click here The Dec. 23 agreement builds upon a looser technology and purchasing partnership the companies began exploring in March. At that time, Honda and Nissan said they would explore teaming up on electric vehicles, automotive software, batteries, procurement and more. Mitsubishi joined those talks in August. “Without the courage to transform, we will be unable to continue,” Uchida said. “If we can enter discussions with speed, even against the many emerging players, we can become a winner.” Combining would give the automakers bigger scale to drive down costs and share the R&D burden for new technologies in an industry under siege by change. But it also would create a complicated overlap in Japanese production facilities, key markets, management and product segments. Moreover, cross-holdings could entangle the companies in a knotty shareholder web with existing Nissan partners Renault and Mitsubishi. Even after the tie-up, Honda is expected to continue its project-based cooperation with General Motors on the side, and Nissan will be able to continue its own with Renault, Mibe said. Last year, Nissan emerged from two decades as the junior partner in its alliance with Renault, after both companies agreed to rebalance their cross-holdings. Each will have a 15% stake in the other after Renault sells down the balance of its 43% stake that is held in a trust. As part of its own restructuring and revival plans, Nissan is meanwhile selling down its controlling 34% stake in Mitsubishi Motors Corp. that it acquired in 2016. Mitsubishi CEO Takao Kato said his company would examine the holding company and possibly join. Mitsubishi brings strengths in Southeast Asia, plug-in hybrids and pickup truck platforms. “We see it as a positive move,” Kato said. “It is extremely difficult to afford all the investment and engineering resources alone.” The biggest potential positive of integrating Honda and Nissan would be huge scale. Though both companies have dialed down forecasts, Nissan plans to sell 3.4 million vehicles in the fiscal year ending March 31. Honda plans to sell 3.8 million vehicles. Synergies could be spread across the companies’ combined sales of about 7.2 million vehicles. Mitsubishi would chip in another 895,000 deliveries, bringing total sales to more than 8 million. Toyota Motor Corp., by contrast, sold a record 11.09 million vehicles in the fiscal year ended March 31, solidifying its place as the world’s No. 1. And that total doesn’t count volume from its constellation of capital cross-holding partners, including Subaru, Mazda, Suzuki and Isuzu. While scale and joint savings hold plenty of potential, execution will be the real test. “On paper, many proposed mergers look great,” S&P Global Associate Director Stephanie Brinley wrote in an analysis. But there are many unanswered questions, she added. Among them is how to support Nissan’s restructuring so it does not weigh down the team. Another issue would be how to handle their overlapping premium brands—Acura and Infiniti. How they jumpstart their imploding businesses in China will also be a critical challenge. Both companies have already begun developing their next-generation EV platforms and technologies for the latter 2020s. Integrating them could force more difficult choices. Then, there is the thorny issue of meshing corporate cultures. “Merging Nissan and Honda creates scale, but accessing cost benefits from that scale is also a long-range process which can be costly in the short term,” Brinley wrote. “Finding meaningful and sustainable synergies in the product portfolio, in product development and in manufacturing is where many mergers stumble and fail to live up to the potential.” Hans Greimel is a reporter for Automotive News Ad Age News Editor E.J. Schultz contributed to this story See all of the Global Automotive Marketing Awards winners here

Honda, Nissan to merge by summer 2026

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