Honda, Nissan to merge, eye completion by 2026

A NEW HOLDING FIRM TO LIST SEPARATELY MITSUBISHI MOTORS, TOO, LIKELY TO BE PART OF GROUP

- NICHOLAS TAKAHASHI & TSUYOSHI INAJIMA

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

The two Japanese auto manufacturers signed a basic agreement for merger talks on Monday and held a joint media briefing in Tokyo. Honda also said it will buy back as much as ¥1.1 trillion yen ($7 billion) of its own shares.

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

Mitsubishi Motors Corp., which is 24.5 per cent 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.

Such an alliance would give rise to one of the world's largest carmakers, pitting the trio against Toyota Motor Corp. at home and Chinese automakers abroad, including BYD and Geely Automobile Holdings Ltd.