Japan’s second and third-largest car manufacturers, Honda and Nissan, are reportedly considering a merger, according to Japanese publication Nikkei.
The move would enable the two companies to pool resources to better compete with the world’s largest automaker Toyota and the rising threat of Tesla and China’s BYD, among others.
This isn’t the first time Honda and Nissan have collaborated. The two companies teamed up in March this year in a ‘strategic partnership’ to cooperate in electric vehicle development.
Nissan and Honda sitting in a tree
Should the companies come together, whether with shared equity under a new holding company or as a single entirely new automaker, it would result in a company worth $54 billion and an annual reported output of 7.4 million vehicles, reports Reuters.
Recently, things haven’t been going so well for Nissan financially. Following an abysmal second quarter 85% profit slump, the company announced a $2.6 billion cost-saving strategy in early October that included 9,000 job cuts and a reduction of its global production by 20%. A merger with Honda would go a long way to ease the pressure.
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Speaking to Reuters, Sanshiro Fukao, an executive fellow at Itochu Research Institute, said, “[t]his deal appears to be more about bailing out Nissan, but Honda itself is not resting on its laurels.”
Discussions between Honda and Nissan are focused on exploring new ways the two companies can cooperate on technology development.
While a firm plan has yet to be officially announced by either company, both issued statements to The New York Times.
“As announced in March of this year, Honda and Nissan are exploring various possibilities for future collaboration, leveraging each other’s strengths,” adding “[w]e will inform our stakeholders of any updates at an appropriate time.”
