Japanese news agency Kyodo was the first to report on the developments, citing sources close to the matter. According to Kyodothe two manufacturers are expected to officially announce on Monday that they are entering into merger negotiations. So far, these plans have only been made public indirectly, through media reports citing anonymous insiders. Mitsubishi is also reportedly considering joining merger talks in early 2025.

If the merger succeeds, it would create the world’s third-largest automaker (in terms of unit sales), with only Toyota and the Volkswagen Group larger. However, the success of the negotiations is not a foregone conclusion. Kyodo reports that Honda, for example, is making it a condition of the merger that Nissan improve its performance again.

Nissan’s ownership structure also plays a role. According to KyodoFoxconn plans to buy Nissan shares from Renault. According to some reports, this could influence the course of negotiations between Honda and Nissan. The Taiwanese automaker hopes the potential deal will primarily benefit its electric car business.

But back to the potential merger between the two main players: Since the spring, the two parties have been studying ways to cooperate in the field of software-defined electric cars. According to an interim report from Augustbatteries and electric axles, among others, were to become the main areas of closer cooperation. Honda is considered a hybrid pioneer, but is a laggard when it comes to battery-electric cars. Nissan was once a pioneer in electric vehicles with the Leaf, but has fallen behind. However, both automakers have experience in the field. But it seems that this collaboration is now being considered on a larger scale. There is talk of Honda, Nissan and possibly Mitsubishi Motors founding a joint holding company in which the commercial activities of the trio would be grouped.

If these plans come to fruition, the result would be a group with annual sales of around eight million vehicles. In 2023, Honda and Nissan were number seven and eighth globally. Together, they would overtake companies such as GM, Stellantis and Hyundai-Kia to take third place, behind VW and Toyota.

A merger could boost both companies. Nissan, in particular, is in difficulty: Nissan has had to lower its profit forecasts for the current financial year, among other reasons due to weak activities in China, and has imposed a radical cost reduction program in november. The Japanese company wants cut global production capacity by 20 percent and cut 9,000 jobs. Honda, on the other hand, has struggled to keep pace with the competition when it comes to investing in new technologies. The partnership between Honda and GM is also in trouble. For example, a collaboration on an autonomous car ended in early December. Honda also lost 30 percent of its market share in China.

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