Honda, Nissan in merger talks to form world's 3rd biggest auto group

Honda Motor Co. and Nissan Motor Co. are in talks about a potential merger that could create the third-largest automaker in the world by sales volume, Kazinform News Agency correspondent reports.

Amid fierce global competition in the electric vehicle segment, the Japanese automakers are aiming to challenge giants like the American Tesla Inc. and the Chinese BYD Co.

Honda, Nissan, and Mitsubishi Motors Corp., which is a partner of Nissan, are considering the creation of a holding company to form an alliance that would rival industry giants Toyota Motor Corp. and Volkswagen AG in size. The combined sales are expected to reach approximately 8 million vehicles, including those of Mitsubishi Motors.

In a joint statement, the companies noted that they are " considering various possibilities for future collaboration, but no decisions have been made." Despite the lack of plans for a capital tie-up, Honda President Toshihiro Mibe did not deny such a possibility in the future.

Challenges in key markets

Both Honda and Nissan are facing pressure in the Chinese market, where local brands with more affordable electric vehicles are taking away their market share. As a result, in November, Honda cut its net profit outlook for the current business year through March to 950 billion yen ($6.2 billion), a 14.2% decrease compared to the previous year.

In addition, Honda, which has traditionally developed cars in-house, has been increasingly collaborating with other companies in recent years, including Sony Group Corp. and General Motors Co.

Nissan is also taking steps to cut costs, announcing plans in November to reduce its workforce by 9,000 employees and decrease global output capacity by 20%. The company's challenges are particularly evident in the United States and China.

In 2023, Honda sold 3.98 million vehicles, while Nissan sold 3.37 million. In comparison, the Toyota group sold 11.23 million vehicles, maintaining its leadership for the fourth consecutive year, followed by Volkswagen with 9.24 million vehicles.