Rumors of merger have resurfaced! Shares of Nissan and Mitsubishi soared.

Rumors of the merger of the two giants in Japan’s auto industry have resurfaced!

According to the Nikkei News, Honda Motor (hereinafter referred to as "Honda") and Nissan Motor (hereinafter referred to as "Nissan") have entered the merger negotiation process to better cope with the rapidly changing global automobile industry. According to informed sources, Honda and Nissan are considering setting up a holding company and are expected to sign a memorandum of understanding in the near future. As for the shareholding ratio of the two parties in the new company and other relevant details, it is left to be determined later.

After the news was announced, the share prices of Nissan Motor Co., Ltd. and Mitsubishi Motor Co., Ltd. soared. As of press time, Nissan Motor Co., Ltd. rose by 23.7% to hit the daily limit, Mitsubishi Motor Co., Ltd. rose by over 19%, and Honda Motor Co., Ltd. fell by over 3%.

Transaction details

According to the Nikkei News, Honda and Nissan also intend to bring Mitsubishi Motors into the holding company system. At present, Nissan is the largest shareholder of Mitsubishi Motors, holding a 24% stake in Mitsubishi Motors.

If Nissan-Honda-Mitsubishi merge, the new company will sell more than 8 million cars every year. This will make the company one of the largest automakers in the world, but it is still lower than Toyota Motor, another Japanese automaker (with sales of 11.2 million vehicles in 2023) and Volkswagen, a German automaker (with sales of 9.2 million vehicles last year).

For this report, Honda responded that this report was not released by Honda. Honda stressed that, as announced in March and August this year, Honda, Nissan Motor Co., Ltd. and Mitsubishi Automobile Industry Co., Ltd. discussed the possibilities of future cooperation based on the advantages of each company. Including the contents of media reports, no decision has been made yet. Stakeholders will be informed of the latest situation at an appropriate time.

Mitsubishi Motors said that the media reports on the possible merger of Nissan and Honda were not based on any announcement of the company.

There were signs before the merger of the two companies. ShinjiAoyama, executive vice president of Honda, has revealed that Honda is indeed considering various options, including the possibility of merging with Nissan. He said that the two sides are really considering setting up a holding company to operate. This move aims to integrate each other’s resources, and then compete more effectively with other car companies in the highly competitive automobile industry.

In March, 2024, Honda and Nissan announced that they began to cooperate in battery and software of electric vehicles, and planned to jointly explore the next generation software-defined vehicle platform, and share resources such as motors and inverters to jointly develop new batteries and electric shafts. In August, Honda, Nissan and Mitsubishi Motors signed a memorandum of understanding to jointly explore the potential of cooperation in the fields of vehicle electrification and software development.

If the merger is successful, it will become the largest merger in the automobile industry since Fiat Chrysler and Peugeot Citroen Group merged to form Stellantis in January 2021.

Shares of Nissan and Mitsubishi Motors rose sharply.

After the news came out, the share prices of Nissan Motor Co., Ltd. and Mitsubishi Motor Co., Ltd. soared. As of press time, Nissan Motor Co., Ltd. rose by 23.7% to hit the daily limit, Mitsubishi Motor Co., Ltd. rose by over 19%, and Honda Motor Co., Ltd. fell by over 3%.

According to public information, Honda, Nissan and Mitsubishi Motors are all head car companies in the Japanese auto industry. Since Honda was founded in 1948, its business has spanned many fields such as automobiles and motorcycles. Nissan Auto Co., Ltd. was established in 1933; Mitsubishi Motors became independent from Mitsubishi Heavy Industries in 1970 and is a core member of Mitsubishi Group. In fiscal year 2023 (April 2022 to March 2023), Honda sold about 3.98 million vehicles worldwide; Nissan sold 3.37 million vehicles worldwide in fiscal year 2023; Mitsubishi Motors has 780,000 vehicles.

However, in the China market, the growth of Japanese brand cars has been greatly challenged. From the cumulative sales in China from January to November 2024, Honda decreased by 30.7% and Nissan decreased by 10.5%.

The stocks of the two companies also performed poorly. Nissan dropped 24% during the year, and Honda dropped 11% during the year.

Affected by the downturn in business, Nissan announced in November that it would cut its global production capacity by 20% and start layoffs of 9,000 people equivalent to nearly 10% of the overall size. The formulation of integration measures has become a top priority. Nissan believes that it is necessary to deepen the relationship with Honda in order to rally.

Proofreading: Wang Jincheng