Honda and Nissan confirmed this Wednesday that they are discussing a closer collaboration, but did not confirm the reports of a possible merger.
The two companies had already established a strategic partnership in March to cooperate on the development of electric vehicles, but Nissan’s increasing financial and strategic problems in recent months have heightened the urgency for closer cooperation with Honda, Japan’s second-largest automaker.
Nissan announced a cost-cutting plan of around €2.6 billion last month, which includes cutting 9,000 jobs and 20% of its global production capacity, as declining sales in China and the U.S. led to an 85% drop in second-quarter profits.
The negotiations between Honda and Nissan, revealed by the Japanese newspaper “Nikkei,” would allow the companies to cooperate more on technology and help create a rival to domestic giant Toyota.
The news of a possible merger between Honda and Nissan caused Nissan’s stock prices, the third-largest automaker in Japan, to surge nearly 24% on the Tokyo Stock Exchange. On the other hand, Honda’s stock prices fell by about 3%.
The possibility that the merger could also involve Mitsubishi, of which Nissan is the main shareholder with a 24% stake, caused Mitsubishi’s shares to rise nearly 20%, the largest increase since 2013.
It is worth noting that Honda and Nissan are facing increasing competition from major electric vehicle manufacturers, such as the American Tesla and the Chinese BYD, which has heightened the pressure on the two Japanese brands as they strive to achieve sufficient profits to develop their electrification strategy.
