Japan’s second and third-largest automakers are considering a possible merger and collaboration with a third company.
Ranked by vehicle sales, Honda and Nissan are No. 2 and 3, respectively, in Japan, with Toyota ranking in first place in Japan and worldwide. A merger of Honda and Nissan into one holding company would create the world’s third-largest vehicle manufacturer and could result in combined sales of $191 billion and an operating profit of more than $19 billion, reported Fox Business.
However, talks over the possible merger are in the early stages, according to company officials.
“We are still at the stage of starting our review, and we have not decided on a business integration yet,” said Honda Director and Representative Executive Officer Toshihiro Mibe in a statement released on Monday.
The two automobile manufacturers have explored ways to capitalize on a partnership in electrification, vehicle intelligence, and next-generation automobile software in the past year.
Following the discussions about a possible merger, the two companies announced they had signed a memorandum of understanding with Mitsubishi Motors, a third auto manufacturer, to explore a possible collaboration with the sixth-largest auto manufacturer in Japan.
“At this time of change in the automobile industry, which is said to occur once every 100 years, we hope that Mitsubishi Motors’ participation in the business integration discussions of Nissan and Honda will lead to further social change, and that we will be able to become a leading company in creating new value in mobility through business integration,” Toshihiro said in a press release on December 23.
Mitsubishi Motors CEO Takao Kato also highlighted the value of collaboration in a changing industry.
“In an era of change in the automotive industry, the study between Nissan and Honda about a business integration will accelerate synergy maximization effects, bringing high value also to the collaborative businesses with Mitsubishi Motors. In order to realize synergies and to make the best use of each company’s strengths, we will also study the best form of cooperation,” Takao said in the press release.
The automakers have struggled to compete in the emerging electric vehicle market, which has been dominated by industry heavyweights Tesla and China-based BYD, per Fox.
The three companies hope to finalize discussions on a potential business partnership by January 2025, according to the press release.