Honda and Nissan, Japan’s second and third-largest automakers, have officially commenced negotiations for a merger aimed at completion by 2026.

Both companies announced on December 23 that their boards of directors had approved the initiation of formal discussions for the management integration. The plan involves establishing a new holding company by August 2026, under which Honda and Nissan will operate as subsidiaries. The holding company, headquartered in Japan, will oversee the unified operations, with its CEO selected from Honda’s board members. Both companies will delist their shares following the merger while maintaining their respective automotive brands.

At a joint press conference in Tokyo, Honda President Toshihiro Mibe, Nissan President Makoto Uchida, and Mitsubishi Motors President Takao Kato detailed the framework of the proposed integration, highlighting plans to consolidate vehicle platforms, integrate R&D, streamline production bases, enhance supply chain competitiveness, and unify sales functions.

Mibe stated, “In a dramatically changing automotive landscape, we’ve identified significant synergies from this collaboration. Beyond four-wheel vehicles, we envision integrating two-wheelers and even mobility sectors like aviation, creating more touchpoints with customers worldwide.” Uchida added, “This marks a pivotal step forward, positioning us among the top global automakers.”

If the merger materializes, the combined entity would surpass Hyundai Motor Group to become the world’s third-largest automaker.

In 2023, Honda sold 3.98 million vehicles globally (ranked 7th), and Nissan sold 3.37 million (ranked 8th). Their combined sales of 7.35 million units would outpace Hyundai Motor Group (7.3 million units) while trailing Toyota (11.23 million) and Volkswagen (9.23 million).

Mitsubishi Motors, where Nissan holds a major stake, may also join the merger discussions, with a decision expected by January.

The merger comes as the automotive industry undergoes a once-in-a-century transformation, shifting from internal combustion engines to electric vehicles (EVs). This move seeks to enhance global competitiveness against industry leaders like Tesla and BYD, which have gained a technological edge in recent years.