Honda, Nissan start business integration plan talks

MANILA: Honda Motor Company Limited and Nissan Motor Company Limited  formally started the discussions on their possible business integration through the establishment of a joint holding company.

Based on a statement from the two Japanese automakers, the latest pact between them will “serve as an option to maintain global competitiveness and for the two companies to continue to deliver more attractive products and services to customers worldwide.”

“Today marks a pivotal moment as we begin discussions on business integration that has the potential to shape our future. If realized, I believe that by uniting the strengths of both companies, we can deliver unparalleled value to customers worldwide who appreciate our respective brands. Together, we can create a unique way for them to enjoy cars that neither company could achieve alone,” Nissan Director, President, Chief Executive Officer, and Representative Executive Officer Makoto Uchida was quoted as saying.

“Creation of new mobility value by bringing together the resources including knowledge, talents, and technologies that Honda and Nissan have been developing over the long years is essential to overcome challenging environmental shifts that the auto industry is facing. Honda and Nissan are two companies with distinctive strengths. We are still at the stage of starting our review, and we have not decided on a business integration yet, but in order to find a direction for the possibility of business integration by the end of January 2025, we strive to be the one and only leading company that creates new mobility value through chemical reaction that can only be driven through synthesis of the two teams," Honda Director and Representative Executive Officer Toshihiro Mibe, for his part, noted.

The joint statement also shared that the two marques shall establish an integration preparatory committee to facilitate a smooth integration and will conduct focused discussions.

Based on the committee’s discussions, the companies will study more specific synergies that can lead to the merger enjoying a 30-trillion-yen sales revenue (approximately P11.215 trillion) and 3-trillion yen (P1.121 trillion) operating profit.

Potential synergies from business integration

Below are the possible synergies from the business integration:

• Standardizing vehicle platforms to create stronger products, reduce costs, boost development efficiencies, and improve investment efficiencies, while meeting customer needs around the world  
• The merger will deepen Honda and Nissan’s strategic partnership and joint research agreement on fundamental technologies that started last August 1, which will lead to more integrated collaboration across all research and development functions. This, in turn, would result in improvements toward development capabilities and reductions in development costs through the integration of overlapping functions.
• Substantial improvement in capacity utilization is expected to decrease in fixed costs.
• The two brands intend to streamline purchasing operations and source common parts from the same supply chain and in collaboration with business partners.
• Companies expect that the integration of systems and back-office operations, along with the upgrade and standardization of operational processes, will drive significant cost reductions.
• The merger is anticipated to provide a range of mobility solutions — including new financial services throughout the vehicle lifecycle — to customers of both organizations.
• Through the integration, increased employee exchanges and technical collaboration between the companies are expected to promote further skill development.  

Schedule for the business integration

Board of directors’ resolution	December 23, 2024
MOU Execution	December 23, 2024
Execution of a definitive agreement concerning the business integration (including the share transfer plan)	June 2025 (planned)
Extraordinary shareholders' meeting of the companies (resolutions to approve the share transfer)	April 2026 (planned)
Delisting from the TSE	End of July-August 2026 (planned)
Effective date of the share transfer	August 2026 (planned)

Further, the joint holding company's name, registered office, representatives, executive composition, and organizational structure will be determined by the time of the execution of the definitive agreement.

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