This was reported by Nikei newspaper. If the deal is finalized, it would be the largest in the industry since the merger between Fiat Chrysler and PSA in 2021 to create Stellantis.
Japanese auto giant Honda Motor Co. and Nissan Motor Co. will begin merger talks as they face increasing competition from the world's largest electric vehicle makers, the Nikkei newspaper reported on Tuesday.
Automakers have been tightening ties in recent months as they grapple with the changing electric vehicle landscape. Strong competition from Tesla and local rivals in China, a nation that is rapidly embracing electric vehicles, and stagnant demand in Europe and the United States have intensified the pressure faced by traditional automakers.
On Tuesday, Honda and Nissan issued identical statements saying neither company had announced a merger. Reuters has not independently verified the report.
"As announced in March this year, Honda and Nissan are exploring various possibilities for future collaboration, leveraging each other's strengths," the companies said in separate statements, adding that they will inform interested parties of any updates at the appropriate time.
French carmaker Renault, a major Nissan shareholder, also said it had no information and declined to comment.
Over the past year, the EV price war started by Tesla and Chinese automaker BYD has only intensified the pressure on companies losing money on next-generation vehicles. This has put pressure on companies like Honda and Nissan to find ways to cut costs and speed up vehicle development, and the mergers are an important step in that direction.
Honda's market capitalization is 5.95 trillion yen ($38.8 billion), while Nissan's is 1.17 trillion yen ($7.6 billion). Any deal would be the largest in the industry since Fiat Chrysler's $52 billion merger with PSA in 2021 to create Stellantis.
"The idea that some of these smaller players can survive and thrive is becoming more difficult, especially when you add in the complexity of all the additional Chinese manufacturers that have come in and are competing quite strongly," said Edmunds analyst Jessica Caldwell. "You just need to survive — not just survive, but just be able to weather the future."
