By Peter Landers
TOKYO -- Honda and Nissan said they planned to merge in 2026, a move that has won Japanese government backing to keep the nation's status as a leader in car manufacturing.
The companies said their boards formally approved the start of merger talks on Monday. They said they planned to reach a definitive agreement in June 2025 and complete the merger in August 2026.
Under the plans, a joint holding company would be created that would integrate the operations of both automakers.
Honda's chief executive, Toshihiro Mibe, said the companies were already finding efficiencies from previously announced collaboration.
"We realized that the synergy effects were greater than expected," and that helped push forward the merger plan, he said at a news conference.
The companies had said on Dec. 18 that they were studying a possible merger.
Nissan shares have rallied more than 30% since that announcement. Nissan has suffered from falling profits and lackluster sales in the U.S., and investors see a merger as a chance for it to recover by leaning on a stronger peer.
Honda, which expects a net profit of about $6 billion this fiscal year, is in no immediate need of a savior. But the company said it needed greater scale to meet the challenges of developing new technologies.
Japan's government has left no doubt about its support for a merger.
"We should take a favorable view when companies cooperate to strengthen their competitiveness," said Yoji Muto, head of the Ministry of Economy, Trade and Industry, on Friday. Muto, while declining to discuss the Honda-Nissan merger plan specifically, said such industry realignments are "one effective method for fostering innovation and raising corporate value."
The chief executives of Honda and Nissan visited government ministries Monday morning ahead of their announcement, in a symbolic show of deference to their regulators.
Carlos Ghosn, the former Nissan chairman who was arrested in Japan in 2018, said Monday that the merger "makes sense politically" because the industry ministry wanted any rescuer of Nissan to be Japanese.
"Do they force somebody? No, they won't force, but they can give you arguments that you cannot refuse," said Ghosn at a news conference. He spoke to Tokyo-based reporters from Lebanon, where he escaped five years ago after being charged with financial crimes which he denied. He no longer has any ties to Nissan.
China has been encroaching on areas that Japan once dominated -- both cars and components such as batteries -- worrying Japanese officials. Last year, China surpassed Japan as the world's leading auto exporter by number of vehicles.
About 8% of Japan's working population is involved in automotive and related jobs, according to the Japan Automobile Manufacturers Association. Last year, the industry overall -- including cars, trucks, motorbikes and components -- accounted for more than a fifth of Japan's total exports, the association said.
Tokyo is funding research projects that bring together rival automakers to work on technologies such as next-generation batteries.
--Yoko Kubota contributed to this article.
Write to Peter Landers at Peter.Landers@wsj.com
(END) Dow Jones Newswires
December 23, 2024 03:43 ET (08:43 GMT)
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