Japanese automakers Honda and Nissan are in discussions about a potential merger to strengthen their position in the global automotive market. The move could create a $54 billion entity, producing 7.4 million vehicles annually, making it the world’s third-largest auto group after Toyota and Volkswagen. This step comes as both companies face increasing competition from EV giants like Tesla and Chinese manufacturers.
Nissan’s financial struggles have added urgency to the talks. The company recently announced a $2.6 billion cost-saving plan, including job cuts and reduced production capacity, following an 85% drop in second-quarter profits. While Honda remains financially stable, its EV performance has been underwhelming, pushing it to explore deeper collaboration.
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Market reactions have been significant, with Nissan shares rising 24% in Tokyo trading, while Honda’s dropped by 3%. Mitsubishi Motors, in which Nissan holds a stake, saw a 20% surge in shares. The Japanese government may also play a role, as experts suggest subsidies could be involved to support the potential merger.
If successful, the merger would enhance Honda and Nissan’s ability to compete with Toyota and fast-growing Chinese EV manufacturers like BYD. Both companies are also considering increased cooperation with Mitsubishi Motors, potentially reshaping the domestic and global auto landscape.
