Car manufacturer announces integration plans until 2026

Nissan and Honda have announced plans to merge by 2026, marking a game-changer for the Japanese automotive industry.

The two carmakers have signed a memorandum of understanding that allows them to continue discussions about integration through a joint holding company, the companies said.

If Nissan and Honda actually integrate, they could become the world’s third-largest automobile company, according to Reuters.

Mitsubishi Motors, in which Nissan has a 24% stake, will announce by the end of January whether it will join the merger.

“The rise of Chinese automakers and new players has greatly changed the automotive industry,” Honda CEO Toshihiro Mibe said at a news conference, pointing to the technological trends of electrification and autonomous driving. “We must build capabilities to fight them by 2030 or we will be defeated.”

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Once the merger is complete, Honda and Nissan are targeting combined sales of $191 billion, according to Reuters.

A merger could be a “long-term strategy.”

Jessica Caldwell, head of insights at auto research and news company Edmunds, previously told USA TODAY that the merger makes sense.

“A merger would be a long-term strategy and not a solution to short-term challenges facing either company,” Caldwell previously told USA TODAY. “Both Nissan and Honda are positioning themselves for a future that will be dominated by electrification and autonomous technology – developments that are extremely costly.”

As the future increasingly turns to electric and self-driving vehicles, “it is logical that smaller automakers may need to work together to keep up with larger players, including increasing competition from Chinese manufacturers that have aggressively entered the market,” Caldwell said .

The merger could face an obstacle due to the new presidency

The possible rollback of EV-friendly policies by US President-elect Donald Trump and merger review by the Trump administration could pose a hurdle for companies.

The new president promised a tough line on imported vehicles, including imposing 25% tariffs on vehicles shipped from Canada and Mexico. Both companies currently have plants in Mexico and Honda has a plant in Canada.

Trump could ask Honda and Nissan for concessions to agree to any deal, auto industry officials said. During his first term, Trump threatened tariffs on Japanese vehicles.

Honda and Nissan also manufacture vehicles in the United States. Honda has 12 manufacturing facilities in the United States that produce automobiles, power equipment and aircraft engines. Nissan, which has three plants in the U.S., announced 9,000 layoffs worldwide and a 20% cut in production last month.

Contributors: Hadley Hitson, USA TODAY Network; Reuters.

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