In December 2024, reports emerged that two of Japan's automotive juggernauts are looking to form a merger akin to the automotive equivalent of a 'dream team.' On Dec. 23, the leaders of Japanese automakers Nissan (NSANY) and Honda (HMC) announced that they intend to merge under a holding company in an effort to stay competitive against its rivals in a world shifting towards electric vehicle adoption.

The problem is there is no likely outcome that would leave both companies and their employees better off than they are today.

If there's one thing executives at Honda Motor and Nissan Motor need to fix first when - and if - they merge, it's their China business. The Japanese duo's sales have been falling for years in the world's largest car market.

Honda and Nissan signed a memorandum of understanding (MoU) to begin discussions on a potential business integration.

Honda and Nissan's $58bn merger aims to compete with China's EV dominance, but risks include cultural clashes, overlapping markets, and uncertain innovation outcomes.

Honda and Nissan are weighing the creation of a joint holding company “amid the dramatic changes in the environment surrounding both companies and the automotive industry,” Honda said. Among the reasons for exploring a merger: Critically examining plants and jobs.

Discussions are currently underway for the merger of Honda and Nissan. Working together, Honda-Nissan will have improved cost efficiencies and production capacity. They will be in a better position to tackle the threat from China-based EV manufacturers. If things go smoothly, the Honda-Nissan merger could be completed by 2026.

It seems like Japanese automakers are fast falling behind the EV movement, with Tesla and Volkswagen taking the lead. However, that could all change by 2025, says CNN, as Honda and Nissan

Honda executives recently shared insights into their rationale for the proposed merger with Nissan.During a media roundtable at CES 2025 in Las Vegas Honda stressed the urgency to address mounting competition from Chinese automakers,

To hit this target, Nissan will need to rake in approximately 400 billion yen in fiscal 2026—roughly $2.6 billion at current exchange rates. That’s a tall order, especially considering Nissan’s operating profits plummeted by 90.