Japanese automakers Honda Motor (NYSE:HMC) and Nissan Motor Co are reportedly set to begin merger negotiations to tackle mounting competition from global electric vehicle (EV) leaders like Tesla and China’s BYD, the Nikkei reported on Tuesday.
The merger would establish a single holding company and could include Mitsubishi Motors, in which Nissan holds a 24% stake, creating one of the world’s largest auto groups. Combined, Honda and Nissan sold 7.4 million vehicles globally in 2023.
Both companies have been grappling with declining market share in China, where EV adoption has surged. Nissan, once an EV pioneer with its Leaf model, is now reeling from weak demand and financial strain, reporting a 90% drop in half-year net earnings and cutting its annual profit forecast by 70%. Meanwhile, Honda is advancing hybrid models and its new EV platform to compete globally.
In identical statements, both firms denied a formal merger announcement but confirmed they are exploring future collaboration.
The reported talks come as automakers face intense cost pressures, slowing EV adoption in Europe and the US, and increasing competition from Chinese manufacturers. Broader industry challenges have forced major players like Volkswagen, Ford, and Stellantis to cut jobs and close plants.
A Honda-Nissan merger would be the industry’s largest since Fiat Chrysler and PSA Group merged in 2021 to form Stellantis. However, the deal could face US scrutiny, particularly under President-elect Donald Trump’s protectionist trade stance.