Japanese automakers Honda and Nissan plan to begin talks over a possible merger, according to reports.
The Nikkei newspaper reported on Tuesday that the two Japanese companies will begin talks to counter increasing global competition from major electric car makers.
Japan's second- and third-largest automakers, with combined sales of 7.4 million vehicles in 2023, are losing ground to Chinese rivals such as BYD and Lee Auto. They are forced to compete with rapidly increasing sales.
Nissan shares soared more than 20% in early trading Wednesday.
A Honda spokesperson said the possibility of a merger is also one of the possibilities being considered. “Honda and Nissan are discussing the possibility of cooperating in a wide range of areas in the future, including the latest reports, but nothing has been decided,” the spokesperson told AFP. No,” he said.
The two companies have strengthened their relationship in recent months, and in March decided to partner to collaborate on the development of EV technology.
At the time, Nissan Motor CEO Makoto Uchida said: “Start-up companies are very aggressive and are moving in at an incredible rate. If you stick to conventional wisdom and traditional approaches, you won't be able to compete.”
According to the Nikkei Shimbun, the two automakers are considering operating under a single holding, but their respective stakes in the new company and other details will be determined in the future.
Mitsubishi Motors, the largest shareholder in which Nissan Motor Co. has a 24% stake, is also likely to become part of the holding company.
Both deals follow the $52bn (£40.9bn) merger of Fiat Chrysler and PSA in 2021 to create one of the world's largest car groups, with brands such as Jeep, Dodge, Maserati, Peugeot and Citroën. This could be the industry's largest since the founding of Stellantis. .
The move comes as many of Europe's biggest carmakers struggle with weak demand and fierce competition, while investing in switching from gasoline and diesel production to electric vehicles, leading to declining profits.
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Last month, Stellantis announced it would close its Luton factory, putting 1,100 jobs at risk, citing the state of the UK economy and the government's zero-emission vehicle (ZEV) mandate.
Ford also announced in November that it would cut 4,000 jobs in Europe, including 800 in the UK, while Volkswagen is preparing to close three factories in Germany, the first time the company has closed a plant in the country.
Nissan said in a statement, “The contents of the report have not been announced by either company.As announced in March of this year, Honda and Nissan are exploring various possibilities for future collaboration while leveraging each other's strengths.'' We are looking into this and will update stakeholders at the appropriate time.”
