Japanese automotive giants Honda and Nissan are reportedly in preliminary discussions about a potential merger to strengthen their position in the highly competitive electric vehicle market, especially in China.
According to the BBC, both companies have acknowledged their ongoing collaboration, stating, “As announced in March of this year, Honda and Nissan are exploring various possibilities for future collaboration, leveraging each other’s strengths.”
However, they emphasized that the merger reports are speculative and not officially confirmed.
Sources, including Japanese business daily Nikkei, indicate that the talks are still in their infancy, with no certainty of an agreement.
Honda and Nissan have not denied the reports but maintain that updates will be shared with stakeholders if and when appropriate.
Honda and Nissan, Japan’s second and third-largest automakers respectively, face mounting pressure as they lose market share to cheaper EV manufacturers, particularly in China, which accounted for nearly 70% of global electric vehicle sales as of November.
The potential merger is seen as a response to the industry-wide shift from petrol and diesel vehicles to EVs, with Chinese brands like BYD outpacing competitors.
BYD, for example, surpassed Tesla in quarterly revenues for the first time in October.
The two automakers already have agreements in place. In March, they announced a strategic partnership focused on EVs, and by August, they had deepened ties, including cooperation on batteries and advanced technology.
Both firms also agreed to include Mitsubishi Motors in discussions about electrification and intelligence technologies, with Nissan being Mitsubishi’s largest shareholders.
Following reports of the merger talks, Nissan’s shares** surged over 20% in Tokyo. Mitsubishi’s shares rose by 13%. Honda’s shares dropped by 2%.
Despite the potential benefits, a merger between Honda and Nissan could face significant hurdles, Political Scrutiny In Japan, such a move may lead to job cuts triggering regulatory and public concern. Nissan may need to unwind its long-standing partnership with French carmaker Renault to make the merger feasible.
Analysts have mixed views on the potential merger. Jessica Caldwell of Edmunds noted the increasing difficulty for smaller automakers to thrive in the evolving EV market, saying, “It’s not just about survival but also affording the future.”
On the other hand, Jesper Koll of Monex Group questioned whether the merger would significantly enhance competitiveness, likening it to “rearranging the deck chairs on the Titanic,” as neither automaker currently boasts groundbreaking EV technology or products that dominate global demand.
