Mitsubishi Motors May Exit Honda-Nissan Merger Plans

Mitsubishi Motors might step back from joining the planned merger between Honda and Nissan, according to a report gathered by Reuters. The Japanese automaker currently has 34.01% of its ownership parked under Nissan, and is apparently still keen on maintaining its listing on the Tokyo Stock Exchange while continuing its collaborations with both companies, albeit separately.

Other recent reports out of Japan also suggest that Mitsubishi is reconsidering its participation in the three-way alliance it currently has with both Nissan and Renault. Concerns appear to stem from the company’s smaller size, which could limit its influence within the holding company’s management structure.

Japan's Yomiuri daily reported on Friday that Mitsubishi Motors is considering opting out of the planned merger, causing its shares to drop sharply by as much as 8.7% during morning trade. However, the losses were partially recovered by the afternoon, with shares ending 6% lower. The news also affected other players in the alliance, with Honda’s stock declining over 1% and Nissan’s slipping 3.5%.

The merger proposal between Honda and Nissan was formalised last December when the two automakers signed a memorandum of understanding (MoU), one which caught the unsuspecting public by total surprise.

The agreement outlines plans to finalise the merger’s terms by June 2025, with a joint holding company expected to be established by August. This alliance aims to strengthen the companies’ competitiveness in the fast-evolving global automotive market, though observers continue to struggle at seeing how both brands could complement each other given their current product lineup and trajectories. Even without Mitsubishi’s involvement, reports indicate that the Honda-Nissan merger alone would result in the 3rd largest automaker by volume.

Initially, when news of the merger came to light, Mitsubishi expressed interest in becoming a third partner in the alliance and agreed to engage in discussions. At the time, the company announced that it would make a final decision by January 2025 regarding its involvement.

Should Mitsubishi decide to proceed, the move would mark a major milestone in collaboration among the three Japanese automakers, consolidating the majority of the country’s most recognised passenger car brands under one roof.

For now, however, Mitsubishi seems to be leaning toward maintaining its independent operations, raising questions about how this decision might impact the dynamics of the Honda-Nissan merger and the broader automotive industry. Also important to consider is, can Mitsubishi survive on its own?