The Japanese car manufacturers, Nissan and Honda, announced their merger plan, which would make them the third largest car manufacturer in the world and the third in terms of sales.
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The automotive industry is undergoing dramatic changes as it seeks to move away from fossil fuels, prompting many companies to make risky decisions in order to remain relevant.
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Mitsubishi Motors Corp. would be integrated into the merger of Nissan and Honda as a smaller ally, with the goal of catching up with the electric car industry that China is leading, along with Tesla.
The merger of Honda, Nissan, and Mitsubishi could bring them up to the level of Toyota and Volkswagen.
Honda's president, Toshihiro Mibe, explained that they will try to unify their operations under a joint holding company and that they will be the ones leading the new administration, while maintaining the principles of all the companies.
They aim to reach a formal merger agreement by June 2025 and, after completing the agreement, list the holding company on the Tokyo Stock Exchange by August 2026.
If Honda, Nissan, and Mitsubishi manage to merge, they will become a giant with a value of over 50,000 million dollars, putting them on par with Toyota Motor Corp. and Volkswagen AG.
The merger reflects a trend across the industry towards consolidation, with companies exchanging knowledge in their respective areas of expertise to offer better electric cars, particularly with improved batteries and software.
“As the business environment surrounding the automotive industry is changing significantly and competitiveness in storage batteries and software is becoming increasingly important, we expect the necessary measures to be taken to survive international competition,” said Japan’s Chief Cabinet Secretary, Yoshimasa Hayashi.