A Revolutionary Century for the Automotive Industry
🚘 ❗️ Honda Motor, Nissan Motors, and Mitsubishi Motors have signed a memorandum of understanding to explore Mitsubishi’s potential involvement in a business integration through the creation of a joint holding company. This follows Honda and Nissan’s prior agreement centered on intelligence and electrification. Mitsubishi plans to decide on its participation in the business integration between Nissan and Honda by the end of January 2025, while evaluating the best form of collaboration. Even with just the merger of Honda and Nissan, the combined company would become the world’s third-largest automaker by sales, trailing only Japan’s Toyota and Germany’s Volkswagen. Its market capitalization is estimated at around $55 billion based on current prices, with the parent company set to be listed on the Tokyo Stock Exchange (TSE). The merger could help close the gap with Tesla and China’s BYD in EV production, advanced software development, and overall market competition.
Honda CEO Toshihiro Mibe 👇
“Current business models are being upended. It is not going to take 10 to 20 years for that to happen — it will come much faster. We need to have the right artillery in order to be competitive on that battlefield so we’re starting today.”
As a matter of fact 👇
1️⃣ Automotive mergers often struggle to meet expectations and eventually dissolve. For instance, DaimlerChrysler split after nine years of an unsuccessful partnership. More recently, Stellantis CEO Carlos Tavares, who played a key role in the 2021 merger of Fiat Chrysler and France’s PSA Group, stepped down this month under pressure. Last year, Nissan and its long-time partner Renault dissolved a key component of their alliance. Around the same time, Honda and GM dropped their plan to co-develop a low-cost EV lineup, just two years after announcing the collaboration. The Japanese auto industry is now experiencing a long-overdue wave of consolidation. This year alone, M&A activity in the sector reached $10 billion, a 163% increase compared to the previous year, according to Mergermarket.
2️⃣ The Honda-Nissan merger reflects both a significant crisis and a potential opportunity. Japanese automakers, as a whole, have lagged in prioritizing EV development. Toyota continues to focus on hybrids, including plug-in models, while Subaru has only recently launched a range of low-mileage EVs. Nissan’s Leaf was a groundbreaking EV when it debuted in 2010, but the company has yet to deliver more advanced models. Meanwhile, Honda’s EV offerings remain largely obscure.
3️⃣ Automakers from the US, EU, and Japan have come to terms with the fact that China no longer relies on them or their vehicles. China now leads the world in EV and battery innovation and EV sales, offering models that are more affordable, better equipped, and more innovative than their foreign competitors. Sales of foreign brands in China are plummeting, with little manufacturers can do to reverse the trend. For instance, BYD has launched impressive EV lines with extended ranges and has already surpassed Tesla in the Chinese market, with a strong chance of achieving the same in Europe soon. Even Vietnam, through VinFast, has emerged as a significant player in Asia and now boasts its own presence in the US.
4️⃣ As the US retreats from the ‘Trump-era’ EV policies — such as removing incentives and relying on tariffs to block competitors — it risks sidelining itself in the global transition from ICE to EVs. Honda and Nissan recognize this and understand that real growth opportunities now lie in Asia, Latin America, Europe, and eventually Africa.
5️⃣ This merger sends a clear message on two fronts: 1) the companies must unite to ensure their survival; and 2) their future growth lies outside the US market.