Honda and Nissan sign MOU to consider business integration

Once rivals and frontrunners of the Japanese automotive industry have now declared their intentions to join hands as Nissan Motor Co. and Honda Motor Co. sign a memorandum of understanding (MOU) to consider integrating both companies into a joint holding company. 

Aim behind Integration

Enhancing the ability to respond to market changes, integrating technical know-how and human resources of respective management resources along improving long-term corporate value are some of the primary aims of the expected Honda-Nissan joint venture. 

Nissan and Honda are setting their sights on being a world-class mobility company with sales revenue exceeding 30 trillion yen and operating profit of more than 3 trillion yen. Additionally, combining both Honda and Nissan’s four-wheel-vehicle technologies along with Honda’s motorcycle and power products businesses will allow both firms to further contribute to the development of Japan’s industrial base as a “leading global mobility company”. 

Potential Advantages

The potential merger will allow both firms to benefit from standardised platforms to engineer stronger products across multiple segments while ensuring reduced costs and improving investment efficiencies. Catering to multiple powertrain combinations such as ICE, HEV, PHEV, and EV will position the joint holding company to meet diverse customer needs across markets. This move is expected to garner increased sales and operational volumes along with improved customer satisfaction. 

Capacity utilisation of the existing facilities from both firms will further lead to a decrease in fixed costs. Even sharing a common source for supply parts and homogenising the supply chain for both firms will optimise development and production capacity. 

Both human and technological resources will be shared between both firms. While employee exchanges and technical collaboration between the companies are expected to promote skill development, both firms already have a strategic partnership in place towards joint research for next-generation software-defined vehicles (SDVs). 

Timeline and Top Leadership Roles

Both firms have devised a calendar where June 2025 will witness a definitive agreement concerning the business integration laid out. This shall also include finalising details of the share transfer ratio which will be determined based on the results of due diligence and third-party valuations of both companies. Furthermore, April 2026 is the tentative date for the effective transfer of shares where current plans allow Honda to nominate a majority of each of the internal and external directors of the joint holding company amongst which only Honda-nominated candidates can be appointed for top executive posts such as President and Representative Director or President and Representative Executive Officer of the joint holding company. 

Honda Director and Representative Executive Officer Toshihiro Mibe said: “Creation of new mobility value by bringing together the resources including knowledge, talents, and technologies that Honda and Nissan have been developing over the long years is essential to overcome challenging environmental shifts that the auto industry is facing. Honda and Nissan are two companies with distinctive strengths. We are still at the stage of starting our review, and we have not decided on a business integration yet, but in order to find a direction for the possibility of business integration by the end of January 2025, we strive to be the one and only leading company that creates new mobility value through chemical reaction that can only be driven through synthesis of the two teams.”

Recently, Nissan’s main shareholder – Renault Group released a statement acknowledging the MoU between Nissan and Honda and further stating that “all options based on the best interest of the Group and its stakeholders” will be considered.