Japanese companies Honda and Nissan will unite and form the third largest car manufacturer in the world – Observer

Japanese companies Honda and Nissan announced this Monday plans to join forces, form the third largest car manufacturer in the world by sales and face the transition from fossil fuels.

The two companies signed a memorandum of understanding with which Mitsubishi Motors, smallest member of the Nissan alliancealso agreed to participate in negotiations on the integration of its businesses.

“We anticipate that, if this integration comes to fruition, we will be able to offer even greater value to a broader customer base,” said Nissan CEO Makoto Uchida in a statement released this Monday.

News from a Possible merger emerged earlier this monthwith unconfirmed reports that talks about closer collaboration were partly driven by Taiwanese iPhone maker Foxconn’s aspirations to team up with Nissan, which has an alliance with France’s Renault SA and Mitsubishi.

Nissan and Honda say they are exploring “future collaboration”

A merger could result in a giant valued at more than 50 billion dollars (48 billion euros)based on the market capitalization of the three car manufacturers.

Together, Honda, with the alliance of Nissan and Renault SA of France and the small Mitsubishi Motors Corp, would constitute competition worthy of Toyota Motor Corp, which has technological partnerships with the Japanese Mazda and Subaru, and with the German Volkswagen AG.

Even after a merger, Toyota, which launched 11.5 million cars in 2023, would remain Japan’s leading automaker. If they come together, the three smaller companies will produce around 8 million cars.

In 2023, the Honda manufactured 4 million cars and Nissan produced 3.4 million. Mitsubishi Motors manufactured about one million.

Nissan, Honda and Mitsubishi announced in August that they would share electric car components such as batteries and jointly research autonomous driving software to better adapt to electrification-centric changes, following a preliminary agreement between Nissan and Honda established. in March.

Japanese manufacturers Nissan and Honda negotiate alliance for electric cars

Honda, Japan’s second-largest automaker, is widely seen as the only likely Japanese partner capable of rescuing Nissan, which has struggled difficulties after a scandal that began with the arrest of its former president Carlos Ghosnat the end of 2018, on charges of fraud and misuse of company assets, allegations he denies. He was eventually released on bail and fled to Lebanon.

In statements made this Monday to journalists via video conference, Ghosn criticized the planned merger, classifying it as a “desperate measure”.