Japanese automotive leaders Honda Cars and Nissan Motor are poised to establish a joint holding company, marking a significant initial move towards a potential merger between the two manufacturers. This development follows the commencement of discussions today aimed at strategizing the integration of their automotive operations for the global market. The companies have confirmed the signing of a foundational agreement regarding the merger, which is expected to be finalized by June of the following year. Honda and Nissan, recognized as Japan's second and third largest automakers by production volume, will also include Mitsubishi Motors, which has previously been associated with the Renault-Nissan alliance.

The three Japanese manufacturers are currently engaged in finalizing the terms of their agreement. They plan to create a new holding company by August 2026, with Honda Cars retaining the majority control, including key leadership positions such as the presidency. Upon the completion and operationalization of the Honda-Nissan merger, it is projected to rank as the third largest automotive entity globally in terms of sales volume. In a joint statement, Honda and Nissan expressed their ambition to achieve combined sales totaling $191 billion (approximately ₹1.62 lakh crore). This merger represents the most significant transformation in the global automotive sector since the 2021 merger of Fiat Chrysler and the French group PSA, which encompasses Citroen and Peugeot, resulting in the formation of Stellantis.

The consideration of a merger or the establishment of a holding company comes at a critical juncture for Nissan, which is facing urgent financial challenges. Declining sales and profits in key markets such as the United States and China have compelled the company to implement job cuts, reduce production capacity, and revise its annual profit forecast downward by 70 percent. Nissan's CEO, Makoto Uchida, has even indicated his willingness to forgo half of his salary to support the company's financial stability.

Through this collaboration, Nissan aims to share costs and lower production expenses. "We anticipate that if this integration comes to fruition, we will be able to deliver even greater value to a wider customer base," Uchida stated.

Honda-Nissan merger: What it could mean for India

The exact nature of the strategic alliance between Honda and Nissan is expected to be clear in coming days. It will have its impact in India as well where both the Japanese auto giants exist in the mass market segment. While Honda sells cars like the Amaze and City sedans besides the Elevate SUV, Nissan Motor has only Magnite as the only made-in-India SUV in its portfolio. The carmaker launched the X-Trail SUV earlier this year which is brought through the import route.

Also watch: Honda Amaze launched as India's most affordable car with ADAS

Honda and Nissan are expected to collaborate in electric vehicle production globally. Both carmakers have revealed their plans to enter the EV segment in India. Honda had earlier announced that it will drive in the fully-electric version of the Elevate SUV. Nissan too plans to introduce the Ariya electric SUV some time next year. It remains to be seen if the carmakers will collaborate on all upcoming EVs for India.

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