In December 2024, reports emerged that two of Japan's automotive juggernauts are looking to form a merger akin to the automotive equivalent of a 'dream team.' On Dec. 23, the leaders of Japanese automakers Nissan (NSANY) and Honda (HMC) announced that they intend to merge under a holding company in an effort to stay competitive against its rivals in a world shifting towards electric vehicle adoption.

Nissan has reportedly been asked to acquire the shares held by its Renault alliance partner – worth $AU5.8 billion – as merger discussions with Honda continue. Honda has reportedly asked Nissan to buy out the shares held by France’s Renault ahead of a likely merger between the two Japanese brands.

Nissan Motor Corporation is a Japanese automaker founded in 1933 and the parent automaker of Infiniti and formerly Datsun. Nissan produces a wide variety of mass-market vehicles, including popular SUVs like the Rogue,

The mooted Honda Nissan merger and the fallout from leadership change at Stellantis suggests the auto industry must brace for turmoil, where size is a survival necessity.

Honda has announced an agreement to merge with Nissan in a deal worth a reported $54 billion. Mitsubishi, which has long been allied with Nissan, will decide by the end of January 2025 whether to join the venture, potentially increasing the total merger value to $58 billion.

Honda executives recently shared insights into their rationale for the proposed merger with Nissan.During a media roundtable at CES 2025 in Las Vegas Honda stressed the urgency to address mounting competition from Chinese automakers,

Honda and Nissan are weighing the creation of a joint holding company “amid the dramatic changes in the environment surrounding both companies and the automotive industry,” Honda said. Among the reasons for exploring a merger: Critically examining plants and jobs.

To hit this target, Nissan will need to rake in approximately 400 billion yen in fiscal 2026—roughly $2.6 billion at current exchange rates. That’s a tall order, especially considering Nissan’s operating profits plummeted by 90.

It seems like Japanese automakers are fast falling behind the EV movement, with Tesla and Volkswagen taking the lead. However, that could all change by 2025, says CNN, as Honda and Nissan

Honda and Nissan’s merger risks failure due to cultural clashes and misalignment. Find out why HMC and NSANY stocks are uncertain investments.

The direct-to-consumer sales model may witness some dealer resistance since Honda relies on a vast dealer network. Scout is facing a similar backlash from Volkswagen dealers. And the Afeela 1 will also be manufactured at Honda’s Ohio production hub, where most popular models, like the Accord and CR-V are made.