Honda and Nissan Take First Steps Towards Potential Merger

Honda Motor Co. and Nissan Motor Co., two leading automobile manufacturers in Japan, have announced that they are exploring the possibility of a merger. The companies made this announcement during a joint press conference held in Tokyo on Monday. This move aims to combine resources and enhance their competitive strength as part of their efforts to withstand increasing competition from Chinese automakers.

In addition to merger talks, Honda also revealed plans to buy back shares worth 1.1 trillion yen ($7 billion). The companies plan to establish a holding company to oversee the proposed new organization, aiming to list this company on the stock exchange by August 2026. Honda will have the privilege to appoint the majority of the new company's board of directors.

Mitsubishi Motors Corp., in which Nissan holds a 24.5% stake, has also signed a memorandum of understanding. It is expected that Mitsubishi may join the group, with a final decision anticipated by the end of January.

If the merger takes place, it will create one of the largest automobile manufacturers in the world. The merged entity will compete with Toyota Motor in Japan and Chinese automakers such as BYD Co. and Geely Automobile Holdings Ltd. on the international stage. Toyota already holds stakes in Subaru Corp., Suzuki Motor Corp., and Mazda Motor Corp., forming a strong brand alliance supported by superior credit ratings.