Mitsubishi may form alliance with Honda-Nissan

Japan The three-way tie-up could split the domestic market into two powers: Toyota and the Honda-Nissan-Mitsubishi alliance.

Tesla and Chinese automakers are investing heavily in electric vehicles, and Japanese automakers can’t compete on scale or supply chains. The shift in the auto industry will lead to restructuring, including in other sectors in Japan.

Honda and Nissan announced a comprehensive cooperation agreement in March, but nothing has been decided on Mitsubishi, in which Nissan holds a 34.01% stake. Under the latest plan, Mitsubishi will join the group, and the three companies will work together to enhance their competitiveness in an increasingly competitive market.

Mitsubishi could form an alliance with Honda and Nissan, forming an opposition to Toyota. Photo: Motor-fan

Accordingly, Mitsubishi has signed a non-disclosure agreement with Honda and Nissan and started discussions. Honda and Nissan are the second and third largest automakers in Japan, with global sales of 4.1 million and 3.44 million vehicles, respectively, in the fiscal year ending March 2024. If Mitsubishi's sales of 810,000 vehicles during the same period are added, the trio's total sales will be 8.35 million vehicles.

Toyota, the largest automaker, also has an alliance in Japan. It has joined hands with Daihatsu, Suzuki, Subaru, Mazda and Hino, bringing the five companies' sales to 16 million vehicles.

Mitsubishi will work with Honda and Nissan to work out the details of the alliance. The three companies intend to standardize software for cars that helps control the vehicles. Nissan and Honda plan to jointly develop the underlying software, and will discuss its use in Mitsubishi vehicles.

Car software can be upgraded using two-way communication between the car and the outside world to improve performance. This capability will have a major impact on the competitiveness of next generations, but it comes with huge development costs. The company will introduce advanced technology to keep costs low and redirect management resources to other areas related to electrification.

The companies will also consider complementing each other’s product lines. Honda does not currently make hybrids or pickup trucks in Japan. Mitsubishi, which has a strong presence in these areas, will discuss with OEMs. In the future, the two companies will look to cooperate in the small car segment.

Behind the alliance between Honda, Nissan and Mitsubishi lies the shadow of a crisis that could come only once every 100 years. As the shift from internal combustion engines to electric vehicles continues in the quest for zero emissions, Japanese automakers are falling behind.

In 2023, Nissan and Honda sold only 140,000 and 19,000 electric vehicles worldwide, respectively. Meanwhile, Tesla and BYD are leading with sales of 1.8 million and 1.57 million vehicles, respectively. In China, the world's largest auto market, Honda and Nissan are having to change their expansion strategies as they brace for a price war.