Nissan Motor Co. and Honda Motor Co. have signed a memorandum of understanding (MOU) “to start discussions and considerations toward a business integration” between the two companies via the establishment of a joint holding company, according to a Monday news release.

Last week, news outlets reported the companies were discussing a merger. However, according to the Associated Press, the companies confirmed they were considering closer collaboration and denied a future merger.

According to Nissan and Honda, an MOU signed on March 15 was meant to establish a strategic partnership “to further accelerate their efforts toward achieving a carbon-neutral society and a zero-traffic-fatality society.” Then, on Aug. 1, the companies signed another MOU “to deepen the framework of the strategic partnership” and announced they would jointly research fundamental platform technologies for next-generation software-defined vehicles (SDVs). The focus was to be on the areas crucial for intelligence and electrification.

“Throughout the process, Nissan and Honda have engaged in discussions in consideration of various possibilities and options,” the release states. “At the same time, the business environment for both companies and the wider automotive industry has rapidly changed and the speed of technological innovation has continued to accelerate.

“The MOU between Nissan and Honda announced today is aimed to serve as an option to maintain global competitiveness and for the two companies to continue to deliver more attractive products and services to customers worldwide.”

The companies said they believe if the business integration can be realized, they could integrate their respective management resources of knowledge, human resources, and technologies to:

• • “Create deeper synergies;
  • “Enhance the ability to respond to market changes; and
  • “Expect to improve mid- to long-term corporate value.”

Nissan and Honda plan to establish the joint holding company through a joint share transfer. The holding company would be the parent company of both companies. However, that will be subject to approval at each company’s general shareholders meeting and would require approvals from relevant authorities, according to the release.

“Today marks a pivotal moment as we begin discussions on business integration that has the potential to shape our future,” said Makoto Uchida, Nissan director, president, CEO and representative executive officer, in the release. “If realized, I believe that by uniting the strengths of both companies, we can deliver unparalleled value to customers worldwide who appreciate our respective brands. Together, we can create a unique way for them to enjoy cars that neither company could achieve alone.”

Toshihiro Mibe, Honda director and representative executive officer, added, “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.”

According to a separate news release, Nissan alliance member Mitsubishi Motors signed a separate MOU with Nissan and Honda to explore its possible “participation, involvement, and synergy sharing” as part of the joint holding company.

Takao Kato, Mitsubishi Motors director, representative executive officer, and president and CEO, said in the release that he believes a business integration between Nissan and Honda “will accelerate synergy maximization effects, bringing high value also to the collaborative businesses with Mitsubishi Motors.”

“In order to realize synergies and to make the best use of each company’s strengths, we will also study the best form of cooperation,” he said.

Nissan and Honda provided the following “expected synergies” that could be the result of the business integration:

1. “Scale advantages by standardizing vehicle platforms
   • “By standardizing the vehicle platforms of both companies across various product segments, the companies expect to create stronger products, reduce costs, enhance development efficiencies, and improve investment efficiencies through standardized production processes.
   • “The integration is projected to increase sales and operational volumes, allowing the companies to reduce development costs per vehicle, including for future digital services, while maximizing profits.
   • “By accelerating the mutual complementation of their global vehicle offerings – including ICE, HEV, PHEV, and EV models – Nissan and Honda will be better positioned to meet diverse customer needs around the world and deliver optimal products, leading to improved customer satisfaction.
2. “Enhancement of development capabilities and cost synergies through the integration of R&D functions
   • “After the business integration, both companies will encompass more integrated collaboration across all R&D functions, including fundamental research and vehicle application technology research to “enable both companies to efficiently and swiftly enhance their technological expertise, achieving both improvements in development capabilities and reductions in development costs through the integration of overlapping functions.”
3. “Optimizing manufacturing systems and facilities
   • “The companies anticipate that optimizing their manufacturing plants and energy service facilities, combined with improved collaboration through the shared use of production lines, will result in a substantial improvement in capacity utilization leading to a decrease in fixed costs.
4. “Strengthening competitive advantages across the supply chain through the integration of purchasing functions
   • “To fully leverage the synergies from optimizing development and production capacity, both companies intend to boost their competitiveness by improving and streamlining purchasing operations and source common parts from the same the supply chain and in collaboration with business partners.
5. “Realizing cost synergies through operational efficiency improvements
   • “The companies expect that the integration of systems and back-office operations, along with the upgrade and standardization of operational processes, will drive significant cost reductions.
6. “Acquisition of scale advantages through integration in sales finance functions
   • “By integrating relevant areas of sales finance functions of both companies and expanding the scale of operations, the companies aim to provide a range of mobility solutions, including new financial services throughout the vehicle lifecycle, to customers of both organizations.
7. “Establishment of a talent foundation for intelligence and electrification
   • “The human resources of the companies are an invaluable asset, and establishing a strong human resource foundation is crucial for the transformation that will come with the business integration. After the integration, increased employee exchanges and technical collaboration between the companies are expected to promote further skill development. Moreover, by leveraging each company’s access to talent markets, attracting exceptional talent will become more attainable.”

The companies plan to execute a definitive agreement in June and put resolutions to approve the share transfer before shareholders in April 2026 with an effective transfer date in August.

Images

Featured image: Nissan Motor Co. and Honda Motor Co. officials announce they have signed a memorandum of understanding (MOU) for a business integration through the establishment of a joint holding company. (Credit: Nissan and Honda)