Honda, Nissan, and Mitsubishi merger could be bigger news than you think

Honda has announced an agreement to merge with Nissan in a deal worth a reported $54 billion. Mitsubishi, which has long been allied with Nissan, will decide by the end of January 2025 whether to join the venture, potentially increasing the total merger value to $58 billion.

If all parties agree to merge, the resulting entity would become the third-largest automaker by sales, trailing only Toyota and the Volkswagen Group. It would also mark the largest merger of car companies in Japan’s history. The deal is expected to close by August 2026.

A new era of leadership

The companies will operate under an unnamed holding company, with Honda taking a leadership role. However, it remains unclear whether Nissan and Mitsubishi will retain their branding and organizational structures or consolidate under the Honda name. Notably, Honda has committed to a $1.1 billion share buyback program for next year, signaling confidence in this major shift.

Renault, which owns about one-third of Nissan, says it “will consider all options in the best interests of the group and its stakeholders,” hinting it would not hold up a merger.

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Why this merger matters

For Nissan, the merger represents a potential lifeline. The brand has struggled with missed earnings and declining sales over the past decade, leading to speculation about its future viability.

Honda stands to gain significantly as well. Nissan’s expertise in electric vehicle (EV) technology could accelerate Honda’s transition into electrification, providing intellectual property and manufacturing capabilities that may be worth more than the $54 billion merger price suggests. Analysts believe this synergy could allow Honda to leapfrog competitors in the EV race.

Mitsubishi’s uncertain future

Mitsubishi’s potential involvement adds a layer of complexity. While the brand could benefit from an expanded distribution network, there’s also the risk it may lose its identity altogether. Models like the Outlander enjoy modest success, but Mitsubishi’s other offerings, such as the Eclipse and Mirage, are often criticized. If Mitsubishi joins the merger, its commercial vehicle lineup, particularly in the U.S., may face discontinuation.

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The same risks apply to Nissan. With overlapping product lineups, Honda’s strong brand reputation, and its favorable perception among owners and critics, consolidation may lead to tough decisions about which vehicles survive.

The road ahead

Honda CEO Toshihiro Mibe has emphasized that the merger isn’t about “saving” Nissan but adapting to a “drastically changing business environment.” This statement suggests that Honda sees the merger as a strategic move to address challenges like electrification, where it has been slow to progress.

If Mitsubishi decides to join the venture, the company will have to redefine its role within this new alliance. Will it gain relevance, or will its distinct identity be subsumed by Honda and Nissan’s larger presence? The coming months will be crucial in determining the future of this historic merger.

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