It’s official. After rumors and reports swirl on the fate of Nissan, Nissan and Honda have signed a memorandum of understanding (MOU) to start the discussions to integrate the two companies through the establishment of a joint holding company by August 2026. Meanwhile, Mitsubishi Motors has signed a separate MOU to explore the possibility of their participation, involvement, and synergy sharing.

Nissan and Honda will be independently run, but wholly-owned subsidiaries of a new holding company. Mitsubishi Motors will have until January 2025 to make up its mind whether to join the new holding company. If they do, Mitsubishi Motors will sign an additional MOU. The timeline set for finalization by June 2025 and implementation by August 2026—will not be delayed whatever Mitsubishi Motors’ decision would be.

It’s planned that Honda will have majority of the internal and external directors of the joint holding company. President and representative director or president and representative executive officer of the joint holding company will be selected from among the directors nominated by Honda.

Both carmakers deny that the decision is driven by the desire to save Nissan. Instead, they cite a rapidly changing business environment for both companies (and the automotive industry in general), the MOU between Nissan and Honda serves to maintain their global competitiveness. It will also enable both brands to deliver more attractive products and services to customers nationwide.

Marking the announcement, Nissan Director, President, CEO and Representative Executive Officer Makoto Uchida said: “Today marks a pivotal moment as we begin discussions on business integration that has the potential to shape our future. 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.”

Honda Director and Representative Executive Officer Toshihiro Mibe said: “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.”

Nissan and Honda will establish an integration preparatory committee to facilitate a smooth integration and will conduct focused discussions.

Based on the committee’s discussions, as well as the results of due diligence, the companies will examine and analyze more specific synergies. By promptly realizing the synergies from the integration, Nissan and Honda can aim to become a world-class mobility company with sales revenue exceeding 30 trillion yen and operating profit of more than 3 trillion yen.

The expected synergy will see an acceleration in R&D, particularly in areas of platforms, software-defined vehicles, and automotive intelligence. It will result in standardized vehicle platforms across various product segments as well as the “mutual complementation” of their global vehicle offerings including combustion engine, HEV, PHEV, and EV models.

The Nissan-Honda merger will also result in the optimization of supply chain optimization and even manufacturing plants. It will result in possible shared production lines to improve capacity utilization.

The companies expect that the integration of systems and back-office operations, along with the upgrade and standardization of operational processes will further drive down costs.