In a stunning development that could reshape the global auto industry, Japanese giants Honda, Nissan, and Mitsubishi have confirmed they are in discussions about a potential merger. The talks come as carmakers worldwide scramble to invest billions in electric vehicles while facing intense competition from ascendant Chinese rivals.
Auto Titans Consider Joining Forces
The possible three-way combination would unite Japan’s second and third largest automakers in Honda and Nissan, while adding the smaller but still significant Mitsubishi brand. In a joint statement, the companies said Honda and Nissan have agreed to “start consideration toward a business integration”, with Mitsubishi to decide on participating by the end of January.
If finalized, the merger would catapult the new entity to the position of third largest carmaker globally by sales volume, trailing only compatriot Toyota and Germany’s Volkswagen. It underscores the defensive consolidation sweeping through the legacy auto industry as manufacturers strain to fund the hugely expensive transition from internal combustion engines to battery-powered electric vehicles.
EV Shift Strains Budgets
While Toyota has weathered the upheaval relatively well thanks to its pioneering investment in hybrid technology, other Japanese brands are struggling to generate the cash needed to develop competitive EVs. Hybrids, which supplement a gasoline engine with a small battery, remain cheaper for carmakers to produce than pure electrics.
At the same time, Chinese upstarts like BYD and SAIC are aggressively pushing into EVs as a way to gain market share globally at the expense of established players. Even the electronics manufacturer Foxconn, best known for assembling Apple’s iPhones, is making a bold automotive push that reportedly included early merger talks with Honda and Nissan.
Troubled Pasts, Uncertain Futures
Navigating a merger of this scale is fraught with challenges, especially given the complex histories involved. Honda’s market cap currently sits at over four times that of the much smaller Nissan, which has floundered since the shocking 2018 arrest of its former chairman Carlos Ghosn on allegations of financial misconduct.
Ghosn, who claims the charges were manufactured in a corporate coup, escaped from house arrest in Japan in a daring plot involving ex-special forces operatives and a musical instrument case. He now lives in Lebanon as an international fugitive, from where he has publicly dismissed the merger concept, arguing that Honda and Nissan are too alike to generate meaningful synergies.
“From an industrial point of view, there is duplication everywhere,” Ghosn said. The one-time titan of the auto world had himself spearheaded an alliance between Nissan, Mitsubishi, and France’s Renault in an earlier bid for scale, a complex arrangement that ultimately collapsed under the weight of its own contradictions.
Carlos Ghosn, former Nissan Chairman
Betting Big on an Electric Future
Nonetheless, Honda CEO Toshihiro Mibe insists an automotive merger of this magnitude only arises “once every 100 years”, comparing the EV revolution to the dawn of the automobile age itself. Nissan’s leader Makoto Uchida stressed the potential for “significant synergies” across a “wide range of fields”.
With the companies targeting the end of January to determine the feasibility of a merger, all eyes are on Mitsubishi to see if it will join its larger brethren. Even a two-way combination between Honda and Nissan would be among the largest mergers in automotive history, redrawing the competitive balance as automakers stake their futures on an electric transition whose outcome remains to be seen.
As the saying goes, necessity is the mother of invention – or in this case, partnership. Whether a combined Japanese mega-brand can outmaneuver the competition to rule the coming EV era will be one of the decisive business questions of the next decade. For now, all roads lead to a blockbuster merger showdown brewing in Tokyo.
