Japanese car giants Honda and Nissan are working out the details of a major merger that could create the world's third-largest automaker, as the companies look to survive in an industry faced with uncertainty.
Honda Motor Co Ltd (NYSE:HMC) stock is up 13.6% to trade at $27.13 at last glance, as merger talks with Nissan officially move forward , with plans to reach a conclusion in June 2025.
Honda was looking at the second-biggest one-day percentage gain since Oct. 28, 2008.
Honda's (HMC) U.S.-listed shares popped Monday morning after the Japanese automaker and Nissan announced the signing of a memorandum of understanding (MOU) outlining their plans to merge in 2026.
Honda, Nissan and Mitsubishi have confirmed talks are taking place to potentially create the world's third-largest carmaker. The trio on Monday firmed up plans to “start consideration towards a business integration through the establishment of a joint holding company”.
Japanese auto makers Honda and Nissan say they plan to complete the merger in August 2026.
Honda and Nissan signed a basic agreement for merger talks on Monday, according to a joint media briefing held in Tokyo. Honda also said it will buy back as much as ¥1.1 trillion yen ($7 billion) of its own shares.
Honda Motor (NYSE:HMC) and Nissan are expected to announce a plan to establish a joint holding company as part of a potential merger, sources told Reuters. The two automakers aim to finalise the agreement by June 2025, with the holding company expected to list shares in August 2026.
Both companies are grappling with intense global competition in the electric vehicle market from the likes of Tesla and China's BYD.
Honda and Nissan are expected on Monday to announce the start of business integration talks, according to Japanese media reports, as the automakers look to survive a rapidly changing industry landscape.
Honda and Nissan are considering producing vehicles in one another's factories as part of their talks to deepen ties, news agency Kyodo reported on Saturday without citing sources.
Some unions are born of necessity, others from convenience. In the case of Honda and Nissan's potential merger, it is mostly defensive as Chinese rivals take the world by storm.