Honda and Nissan in Preliminary Merger Talks, Reports Say

Tokyo, Japan — Japanese auto giants Honda and Nissan are reportedly in early talks about a potential merger, a move that could help them compete more effectively in the growing electric vehicle (EV) market.

According to reports from the Nikkei, the Financial Times, and others, the companies are exploring a strategic partnership that could include operating under a single holding company. Discussions also involve potentially bringing Mitsubishi Motors—of which Nissan is the top shareholder—into the entity, creating one of the world’s largest auto groups.

Addressing Market Challenges

The potential merger aligns with Honda and Nissan’s shared ambition to expand their footprint in the EV sector. Analysts view the collaboration as a way for the firms to catch up with Tesla and Chinese automakers, who are leading the EV race.

Honda and Nissan agreed in March to explore a strategic partnership on EVs, leveraging their strengths to address challenges such as high development costs and competition from more established EV players.

Company Responses

A Honda spokesperson acknowledged that merger discussions were among the possibilities being explored but clarified that “nothing has been decided.”

Similarly, Nissan stated:
“The content of the report is not something that has been announced by either company… Honda and Nissan are exploring various possibilities for future collaboration.”

Current Standing and Plans

• Honda: Japan’s second-largest automaker, has committed to investing $65 billion in EVs by 2030, aiming for 100% EV sales by 2040.
• Nissan: Japan’s third-largest automaker, announced that more than half of its 30 upcoming models would be “electrified” within three years. However, the company faces financial struggles, having recently cut 9,000 jobs and reduced its annual sales forecast.

Market Reaction

Following the merger reports, Nissan’s shares surged over 20%, while Honda’s fell by 1%. Mitsubishi Motors also saw a 14% gain.

Shifting Industry Dynamics

Japanese automakers have historically focused on hybrids, with hybrids accounting for 40% of vehicle sales in Japan in 2022. However, the EV market, while expanding globally, has seen slower adoption in Japan, where only 1.7% of cars sold in 2022 were fully electric, compared to 15% in Western Europe.

Both Honda and Nissan aim to position themselves better in the EV market, addressing consumer concerns over pricing, range, and charging infrastructure.

If successful, the potential merger could reshape the global automotive landscape, bolstering their ability to compete in a rapidly evolving industry.