According to Japanese media, Honda and Nissan Motors are in the process of merging and are reportedly planning to begin negotiations soon.
The news, first reported by the Nikkei newspaper on Tuesday, comes as both auto giants struggle to compete with the world's biggest electric vehicle (EV) makers, including Tesla Inc. and Chinese automaker BYD.
Neither company has confirmed any merger plans. On Tuesday, both companies issued identical statements discrediting the report.
“As announced in March of this year, Honda and Nissan are leveraging each other's strengths and exploring various possibilities for future cooperation,” the companies said in separate statements.
Honda and Nissan are the second and third largest car manufacturers in Japan, respectively, with Toyota leading them both.
The market capitalizations of Honda and Nissan are approximately 5.95 trillion yen ($38.8 billion) and 1.17 trillion yen ($7.6 billion), respectively.
In November, Nissan cut its global workforce by 9,000 people and cut its global production capacity by 20% in a series of large-scale layoffs.
At the time, the company said it was “facing challenging conditions” and laid out plans to achieve “healthy growth.” The goals included reducing fixed costs by 300 billion yen (approximately $1.9 billion) and variable costs by 100 billion yen (approximately $649 million).
Nissan said in a statement at the time: “We are taking a number of steps to reduce selling, general and administrative expenses, reduce cost of goods sold, rationalize our asset portfolio, and prioritize capital expenditures and investments in research and development. “There is,” he said.
