Two of Japan’s biggest automakers, Honda and Nissan, have reportedly begun merger talks, according to a report in Japan’s financial Nikkei Asia newspaper.
The two Japanese-headquartered automakers are looking to join forces as a way to contend in an ever-challenging industry increasingly focused on electric vehicles, the newspaper reported.
Both companies responded to a question about the report from USA TODAY with identical statements, which did not deny merger talks were underway.
“The content of the report is not something that has been announced by either companies,” the statements read. “As announced in March of this year, Honda and Nissan are exploring various possibilities for future collaboration, leveraging each other’s strengths. If there are any updates, we will inform our stakeholders at the appropriate time.”
Honda and Nissan have recently increased ties to persist in an EV marketplace fueled by competition from Tesla and Chinese automakers – and stalling demand in the U.S. and Europe.
The companies announced in August they were “deepening the framework of the strategic partnership” agreed on in March 2024 to collaborate on research and development – and investments – in new EVs and the software used by next-generation vehicles.
“Going forward, Nissan and Honda will continue to study ways to create further synergies between the two companies and work toward the speedy implementation of specific measures,” the companies said.
Makoto Uchida, president and CEO of Nissan Motor, and Toshihiro Mibe, Honda Motor president and CEO, attend their joint press conference in Tokyo, Japan March 15, 2024.
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The merger makes sense, according to Jessica Caldwell, head of insights for auto research and news company Edmunds.
“A merger would be a long-term strategy, not a solution to any short-term challenges either company is facing. Both Nissan and Honda are positioning themselves for the future, which will be defined by electrification and autonomous technology – developments that are extremely costly,” Caldwell told USA TODAY.
With the future turning to EVs and self-driving vehicles, “it’s logical that smaller automakers may need to collaborate to keep pace with larger players, including rising competition from Chinese manufacturers that have entered the market aggressively,” Caldwell said.
The two companies may operate under a holding company, Nikkei reported, and are expected to sign a memorandum of understanding soon. A merged company could also eventually include Mitsubishi Motors, of which Nissan owns a 24% stake. Mitsubishi joined the Honda-Nissan initiative on EV and next-gen vehicle development in August.
Collectively, the company would have combined sales of about 8 million annually, making it the third-largest automaking company in the world, Nikkei reported.
The merger would put the combined automaker in a better competitive position, according to Bloomberg. Honda, Nissan and Mitsubishi combined sold about 4 million vehicles worldwide in the first six months of 2024, behind the global leader, Toyota, which sold 5.2 million, Bloomberg said. The number two global automaker, Volkswagen, sold 4.35 million.
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The capital-intensive EV business requires billions of dollars in investment for new factories and battery development, said K. Venkatesh Prasad, chief innovation officer at the Center for Automotive Research in Ann Arbor, Michigan.
For legacy automakers such as Honda and Nissan, “it only makes sense to consolidate while you still can to create the volumes you need for cost to be kept low and to be able to design and build premium content capabilities.”
Securing a profitable business in traditional vehicles using internal combustion engines “is a necessary condition to make way for the money needed to build an EV business with a mid-to-long-term business sustainability plan,” Prasad said.
Other hurdles include the potential rollback of EV-friendly policies by U.S. President-elect Donald Trump and merger scrutiny from the Trump Administration.
The incoming president has vowed to take a hard line on imported vehicles, including 25% tariffs on vehicles shipped from Canada and Mexico. Both companies currently have plants in Mexico and Honda has a plant in Canada.
Trump could seek concessions from Honda and Nissan to approve any deal, auto industry officials said. During his first term, Trump threatened tariffs on Japanese vehicles.
Honda and Nissan also manufacture vehicles in the U.S. Honda has 12 manufacturing plants in the U.S., where it makes automobiles, power equipment and aircraft engines. Nissan, which has three plants in the U.S., announced 9,000 global layoffs last month and a 20% production cut.
Contributing: Hadley Hitson, USA TODAY Network, and Reuters.
Follow Mike Snider on X and Threads: @mikesnider &mikegsnider.
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This article originally appeared on USA TODAY: Honda and Nissan reportedly in merger talks to boost EV development
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