Honda and Nissan Explore Historic Business Integration to Create Third-Largest Global Automaker

Honda Motor Co. and Nissan Motor Co. are on the brink of a significant business transformation, with discussions around the potential integration of their operations that could position them as the third-largest automaker in the world by vehicle sales. According to Honda's Director, President, and Representative Executive Officer, Toshihiro Mibe, the combined company could generate annual revenues exceeding 30 trillion yen, with an operating profit of over 3 trillion yen. This merger, still in the discussion phase, underscores the growing trend of consolidation in the automotive industry, driven by the need to address the challenges posed by electrification and vehicle intelligence.

The collaboration between Honda and Nissan, while still in its early stages, promises to deliver substantial synergies in key areas, including research and development (R&D), vehicle platforms, and regional operations. The overarching aim, as outlined by Mibe, is not merely financial gain but the creation of a robust structure capable of addressing the emerging challenges in energy management and future mobility. Both companies have recognized the necessity of adapting to the rapid technological advancements transforming the industry, particularly the rise of electric vehicles (EVs) and the increasing importance of vehicle intelligence.

Financial Synergies and Technological Advancements

As of the financial year ending in March 2024, Honda reported a total revenue of 20.4 trillion yen, with an operating profit of 1.38 trillion yen. Meanwhile, Nissan's revenue stood at 12.7 trillion yen, with an operating profit of 568.7 billion yen. These figures demonstrate the scale of both companies, which, when combined, could leverage economies of scale to accelerate their shift towards electrification and integrate advanced technologies in ways that individual efforts could not achieve.

Honda's Mibe emphasized that the primary objective of the partnership is to drive advancements in electrification and vehicle intelligence. Electrification, which focuses on the transition to electric powertrains, is a critical component of this strategy. However, Mibe pointed out that vehicle intelligence — the integration of advanced communication systems, onboard software, and autonomous driving technologies — will play a crucial role in shaping the future of mobility. Both elements are key to enhancing the performance, safety, and sustainability of vehicles in the coming decades.

In particular, one of the most promising areas of collaboration is the development of high-capacity batteries. These batteries are essential not only for powering EVs but also have broader applications in residential energy storage systems and integration with power grids. This could open up new business avenues for the combined entity, well beyond the automotive sector, into energy management and infrastructure development.

A More Integrated Approach to Mobility

Honda and Nissan have collaborated on specific projects in the past, but this proposed business integration marks a deeper level of cooperation. Mibe noted that previous partnerships, while valuable, were limited to narrower domains and did not fully harness the scale required to tackle the broader challenges of the automotive industry. The integration of both companies would allow for greater technological advancements, efficiency improvements, and enhanced global competitiveness.

This collaboration could also pave the way for a more diversified portfolio of products, from electric cars to energy storage systems, and even to the development of advanced software for various industries. The scale of the combined company would enable it to make significant strides in these areas, benefiting from shared expertise and resources.

Looking Ahead: A New Era for the Auto Industry

In the coming months, Honda and Nissan are expected to finalize a definitive agreement by June 2025. Once the deal is finalized, the new holding company will be incorporated and listed on the Tokyo Stock Exchange, while both Honda and Nissan's subsidiaries will be delisted. Mitsubishi is also involved in the talks, considering its participation in this groundbreaking collaboration.

As the automotive industry continues to evolve, the integration of Honda and Nissan will likely serve as a model for future alliances. With a focus on electrification, vehicle intelligence, and energy management, the combined entity will be well-positioned to lead the charge in transforming mobility. This move highlights the importance of collaboration and the need for automakers to adapt to the challenges and opportunities presented by a rapidly changing world.

As the discussions progress, the automotive industry will be watching closely to see how this integration unfolds and how it shapes the future of global mobility.