Today is an important day for both Honda and Nissan. After a week of dominating headlines in the automotive industry, the two Japanese firms—the second- and the third-largest carmakers in Japan—have now officially signed a “memorandum of understanding” to collaborate by establishing a holding company.

As such, the joint holding company will be entered as a new listing in the Tokyo Stock Exchange come August 2026, while Honda and Nissan as individual entities are expected to be delisted. Both brands will then be wholly owned subsidiaries of the joint holding company.

After this MOU signing between the two companies, Mitsubishi followed suit by also signing an MOU to “explore the possibility of Mitsubishi Motors’ participation, involvement, and synergy sharing in relation to the business integration through the establishment of a joint holding company outlined in an MOU signed between Nissan and Honda.” Mitsubishi is 24% owned by Nissan.

If you are still surprised by this development, you just need to accept the fact that both Honda and Nissan—especially the latter—have lagged behind the competition. In particular, the pair has been unable to match the advancement of technologies and the production of software-defined vehicles coming out of China.

If you ask us to decipher this move, it is very straightforward as far as we can see: They are no longer competitive, and they no longer make appealing vehicles

“Throughout the process, Nissan and Honda have engaged in discussions in consideration of various possibilities and options,” said the press release. We don’t know about you, but this simple statement sounds like one from a panicking cooperation.

“The MOU between Nissan and Honda announced today is aimed to serve as an option to maintain global competitiveness and for the two companies to continue to deliver more attractive products and services to customers worldwide,” the PR added.

If you ask us to decipher this move, it is very straightforward as far as we can see: “We are no longer competitive, and we no longer make appealing vehicles.”

That both brands have been struggling in both China and the US makes it easy to grasp the necessity of the chain of events.

Will this collaboration be successful? We’re as curious as you are. We’re honestly rooting for Honda, Nissan and Mitsubishi. We are still fans, and we hope all three will give this their best shot.

For the details of the business integration, read here.