Honda and Nissan plunge in initial merger talks

By Alimat Aliyeva

Japan's Honda Motor and Nissan Motor have entered into preliminary merger talks amid growing competition from Chinese automakers and lower-than-expected consumer demand for electric vehicles.

According to the report, both companies are "exploring a combination that will allow them to compete more effectively." If the merger proceeds, it could result in the creation of a giant automaker valued at $52 billion, positioning it as the third-largest car manufacturer in the world, behind only Toyota and Volkswagen. This newly formed company would attract significant investments to challenge industry leaders like Tesla in the U.S. and BYD in China.

BYD, the leading Chinese car manufacturer, saw a remarkable 40% increase in sales compared to the same period last year. In the second quarter of 2024, it ranked seventh in global sales, surpassing both Honda and Nissan.

The merger may also have significant implications for Mitsubishi Motors, in which Nissan holds a 27% stake. Mitsubishi could become part of the expanded company, further strengthening its position in the global market. Collectively, Honda, Nissan, and Mitsubishi would produce around 8 million vehicles annually.

This strategic move highlights the growing pressure on traditional automakers to consolidate in the face of a rapidly evolving automotive landscape, where electric vehicle demand and competition from Chinese manufacturers are reshaping the industry.