Honda (HMC, Financial) and Nissan aim to form the world's third-largest automotive group, but intense competition from China raises doubts about the merger's timely completion. The two Japanese automakers have agreed to begin formal merger talks, targeting completion by August 2026. Mitsubishi Motors, Nissan's junior partner, will decide its involvement soon. The merger aims for over ¥1 trillion ($6.4 billion) in synergies through shared platforms, R&D, and procurement, with an operating profit target exceeding ¥3 trillion, a 54% increase from last year.
However, Honda's CEO warns that full synergies may not materialize until after 2030, stressing the need to compete with Chinese rivals. Analysts question if they have enough time, citing weak electric vehicle (EV) offerings. Nissan's new EV, Ariya, faces production issues, while Honda focuses on hybrids. Both companies struggle in China, losing market share to BYD and other local brands. They also face significant execution risks in reversing their Chinese market decline.
