Honda and Nissan formalise merger

Honda Motor Co and Nissan Motor Co took their first historic steps toward merging and creating a new force in the world's automotive industry, as aggressive competition from China forces legacy carmakers to rethink their business models.

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The two Japanese auto manufacturers signed a basic agreement for merger talks yesterday, according to a joint media briefing held in Tokyo. Honda also said it will buy back as much as ¥1.1 trillion (about R129 billion) of its own shares.

The firms said a holding company will be created to house the new entity and should be listed by August 2026. Honda will be able to nominate a majority of the holding company's directors.

Mitsubishi Motors Corporation, which is 24.5% owned by Nissan, also signed the memorandum of understanding and will likely be part of the group with a final decision on that expected by the end of January.