Honda and Nissan have held exploratory talks about a potential merger to help them compete against electric vehicle (EV) makers. The two Japanese car makers agreed to explore a strategic partnership for EVs in March. This move marks a significant step in the Honda-Nissan merger talks.
According to reports, the discussions are in the early stages, and there is no guarantee that a deal will be agreed upon. The firms have not denied the story but said neither company has announced it.
Honda and Nissan have been losing market share in China, which accounted for almost 70% of global EV sales in November. The two brands had combined global sales of 7.4 million vehicles in 2023.
A potential merger between Japan’s top two and three car manufacturers could be complicated. Any deal is likely to come under intense political scrutiny in Japan as it may lead to major job cuts.
Nissan will also likely be faced with unwinding its alliance with French vehicle manufacturer Renault. Honda and Nissan agreed in March to cooperate in their EV businesses. The reports of a potential merger sent Nissan shares trading more than 20% higher in Tokyo. Honda shares fell about 2%, while Mitsubishi’s jumped 13%.
Experts say the merger could be a game-changer for the companies. “It’s just sort of necessary to survive, not only to survive but also just to afford the future,” said Edmunds analyst Jessica Caldwell.
In addition, the merger could lead to significant cost savings. The companies could eliminate redundant operations and focus on developing new EV models.
The Honda-Nissan merger talks highlight the challenges faced by traditional car makers in competing with EV makers. The talks also underscore the need for innovation and adaptation in the rapidly changing automotive industry.
