Perfect Pair: Honda and Nissan to (supposedly) talk merger

December is typically a time when automotive news tends to wind down, as automakers tend to not launch major models or make any huge announcements.

That doesn’t seem to be the case for Nissan. One of Japan’s largest automobile manufacturers hasn’t had an easy time, as there are industry whispers that they only have 12 to 14 months to go given their financial troubles.

It’s not a secret that they have had a difficult 2024 especially given how their sales performance in China took a huge hit, as the EV pioneer didn’t fully capitalize on the shift towards EV and PHEV there, all while domestic brands rapidly expanded their line up and lowered prices. The story is similar in the US as Nissan didn’t expand on their larger vehicle line up nor did they offer hybrids and PHEVs that are in demand.

The only logical thing to do is attract an investor, and the logical investor would likely come from China. We wouldn’t have been surprised if China’s big automakers (of which there are many) were salivating at the prospect of acquiring majority shares in Nissan, but it seems they will go a different way: an all-Japanese way.

Nikkei, citing confidential sources, reported that “Honda Motor and Nissan Motor will enter negotiations toward a merger” with the goal of being more competitive against “Tesla and Chinese electric vehicle makers in a rapidly changing automobile industry”. The report continued that Nissan and Honda are looking at working towards establishing a “holding company” to operate under, and that their respective shares will be decided at a later time.

If it comes to fruition, this would see the two of the three largest automakers of Japan join forces under one entity.

Nissan is no stranger to headlines like this. In the 1990’s Nissan also experienced a lot of trouble with debt amidst Japan’s lost decade (the economic stagnation/decline of the ‘90s). That’s when Renault came in and acquired 36.6% of the company and Carlos Ghosn was tasked to turn it around, which they did. There was some friction; we imagine getting used to a state-owned French automaker calling shots in a traditionally Japanese automaker would have been interesting, but Nissan made it work… at least up until the last few years.

A merger with Honda would see the team up bolster their prospects in a more competitive automotive landscape, but how would that look? We won’t be surprised to see some degrees of cost cutting and streamlining; that would mean job cuts and closures of factories. But we will also see them joining forces in R&D (especially with e-Power and hydrogen tech from Nissan and Honda, respectively) and sharing costs (e.g. shipping, logistics, parts purchasing) that would help lower prices and improve profitability.

If done right, Nissan and Honda will both be far more competitive. And we haven’t even factored in Mitsubishi yet.