Japanese automakers Honda Motor and Nissan Motor are reportedly exploring a potential merger, according to a report by the Central News Agency citing Nikkei. The companies aim to consolidate their resources to strengthen their position against competitors like Tesla and Chinese electric vehicle (EV) manufacturers. Discussions include forming a single holding company, with expectations of signing a memorandum of understanding (MOU) soon.

Mitsubishi Motors may join the alliance

Reports also suggest that Mitsubishi Motors could be included in the holding company, as Nissan holds a significant stake in Mitsubishi. Together, the three automakers would achieve combined annual sales of over 8 million vehicles, positioning them as the third-largest automotive group globally.

Ongoing discussions without final agreements

Honda’s President, Mibe Toshihiro, confirmed that talks regarding strategic partnerships with Nissan are ongoing, though he stopped short of confirming a merger. Nissan echoed this sentiment, emphasising that while discussions are active, no agreements have yet been reached. The companies began negotiations in March and established a partnership in August to share automotive components and software. Mitsubishi has also expressed interest in collaborating with the duo.

Facing challenges from rising Chinese automakers

The potential merger comes as Chinese EV makers like BYD continue to disrupt the market, bolstered by government support and expanding rapidly. Chinese EVs and other new electric vehicles are projected to account for 40 percent of all vehicle sales in China this year. This shift has significantly impacted Japanese automakers, with Honda’s China sales falling by 30.7 percent and Nissan’s declining by 10.5 percent year-on-year from January to November 2024.

Strategic collaborations

The possible Honda-Nissan merger is part of a broader trend of automakers seeking alliances to navigate the evolving automotive landscape. In September, General Motors revealed plans to explore partnerships with Hyundai Motor, while BMW teamed up with Toyota Motor to develop fuel cell vehicles. Similarly, Rivian Automotive is collaborating with Volkswagen on EV projects.