TOKYO – In a groundbreaking move that could reshape the automotive landscape, Japanese carmakers Nissan, Honda, and Mitsubishi have confirmed that they are in talks for a potential three-way merger. This unexpected development has sparked widespread interest within the industry, as the merger could combine the strengths of three of Japan’s most recognized automotive brands.

Nissan, Honda, and Mitsubishi could become a global powerhouse

In response to the evolving challenges within the automotive industry, Nissan and Honda have initiated discussions on a potential business integration through the creation of a joint holding company. Building on this development, the three companies have agreed to explore the possibility of creating further synergies by including Mitsubishi in the integration process. Mitsubishi Motors is expected to make a decision regarding its participation in this business integration by the end of January 2025, potentially marking a significant step in the collaboration between these major automotive players.

The proposed merger would unite Japan’s second- and third-largest automakers, Nissan and Honda, along with the smaller Mitsubishi, forming a powerful alliance. This collaboration would result in the world’s third-largest carmaker by annual sales, surpassing all competitors except for Japan’s Toyota and Germany’s Volkswagen. By joining forces, these companies aim to strengthen their position in an increasingly competitive and rapidly changing market, ensuring their place among the global automotive giants.

Following the announcement, Nissan Director, President, CEO and Representative Executive Officer Makoto Uchida said: “Honda and Nissan have begun considering a business integration, and will study the creation of significant synergies between the two companies in a wide range of fields. It is significant that Nissan’s partner, Mitsubishi Motors, is also involved in these discussions. We anticipate that if this integration comes to fruition, we will be able to deliver even greater value to a wider customer base.“

Struggles to remain financially afloat amidst switch to hybrid and electric vehicles

While Japanese powerhouse Toyota has maintained financial stability due to its early investments in hybrid vehicles, Japan’s other automakers are facing significant financial challenges as they transition from traditional petrol and diesel engines to cleaner electric vehicles. The shift to electric and hybrid technology requires substantial investments in research, development, and manufacturing infrastructure.

Hybrids, which combine a petrol engine with a smaller battery, are still more affordable for manufacturers to produce compared to fully electric vehicles. In response to these financial pressures, the proposed merger between Nissan, Honda, and Mitsubishi aims to pool resources and share the cost burden of this necessary transition to cleaner energy.

Honda’s market value stands at 6.74 trillion yen (£34bn), significantly higher than Nissan’s 1.67 trillion yen and Mitsubishi’s 717 billion yen. In 2023, Honda sold 3.8 million cars, demonstrating impressive efficiency. In contrast, Nissan, despite selling 3 million cars last year, is valued at just a quarter of Honda’s worth. Mitsubishi, meanwhile, sold 700,000 vehicles in the same period.

The automobile industry is going through a revolution

The automobile industry is undergoing a profound revolution, driven by the increasing demand for sustainable engine solutions. As concerns over climate change intensify and governments implement stricter emissions regulations, automakers are under pressure to move away from traditional internal combustion engines and embrace cleaner alternatives.

Electric vehicles have become the centerpiece of this shift, with manufacturers investing heavily in electrical e3ngine technology, battery development, and infrastructure. Hybrid and hydrogen-powered vehicles are also gaining attention. The collaboration between the three Japanese automobile companies aims to share the financial burden of transitioning to electric and hybrid vehicles while enhancing innovation in green technologies.

With consumers increasingly opting for eco-friendly options, and governments offering incentives to accelerate adoption, the future of the auto industry will depend on how well companies can adapt to the demand for sustainability and clean mobility.