Nissan Shares Surge 24% After Reports Of Merger Talks With Honda

Nissan Motor’s shares surged Wednesday morning after reports the company had initiated merger talks with fellow Japanese carmaker Honda, in possible efforts to help Nissan wade through an ongoing crisis and reportedly allow the Japanese companies to compete better against electric vehicle rivals from China and Tesla.

Makoto Uchida president and CEO of Nissan, shakes hands with Toshihiro Mibe director, president and … [+] representative executive officer of Honda, after the two companies announced in strategic partnership in August.

AFP via Getty Images

Key Facts

In a Tokyo Stock Exchange filing, Nissan said it is considering “various ways of future collaboration” with Honda and Mitsubishi as part of a strategic partnership that was announced earlier this year, “including some matters reported in the press…but nothing has been finalized at this time.”

Honda and Mitsubishi Motors also issued a similar statement in a regulatory filing, noting that the media reports are not based on any official announcements from the company.

According to Nikkei Asia, which first reported the merger talks, Honda and Nissan are discussing the possibility of operating under a single holding company that would allow them to pool their resources to take on emerging rivals.

The report said the size of each of the two automakers’ stakes in the new holding company and other financial details of the merger are yet to be decided.

The merged entity also plans to eventually bring Mitsubishi Motors—whose top shareholder is Nissan—on board, the report added.

Get Forbes Breaking News Text Alerts: We’re launching text message alerts so you’ll always know the biggest stories shaping the day’s headlines. Text “Alerts” to (201) 335-0739 or sign up here.

How The Market Reacted To The Honda-Nissan Merger Reports?

The price of Nissan’s shares surged 24% to JPY 417.6 ($2.72) in Wednesday morning trading in Tokyo, prompting a pause in trading as it hit the upper limit for a single-day swing. Mitsubishi Motor Corp’s stock price surged nearly 20% to JPY 487 ($3.17) after the news was reported. The shares of Honda Motors—the biggest of the three companies—went up initially, but eventually slipped to JPY 1,233 ($8.04), down nearly 4% from the previous day. The stock of Japan’s biggest automaker Toyota—which will continue to hold that crown even if this merger goes through—rose nearly 2% to JPY 2,725 ($17.76).

Surprising Fact

In the 2023-24 financial year ending March, Toyota sold more cars than Honda, Nissan and Mitsubishi combined. In FY 2023-24 Honda, Nissan sold 4.1 million, 3.4 million and 815,000 cars respectively—in comparison Toyota and its luxury sub-brand Lexus sold 10.3 million vehicles.

Big Number

94%. That’s how much Nissan’s net income was down in the first half of its ongoing financial year compared to the same period last year. The company’s operating profit was also down 90% in the first half of FY 2024-25 compared to last year.

Key Background

In March, Nissan and Honda announced they were exploring a strategic partnership to collaborate on the production of several key components for electric and autonomous vehicles. As part of the deal, the two companies began a feasibility study for collaborating on car software platforms, EV components and other products. In August, the strategic partnership plans were expanded to include Mitsubishi.

Luxury House