Japanese automobile giants, Honda and Nissan have began preliminary discussions regarding a potential merger to strengthen their competitiveness against electric vehicles (EVs) manufacturers, particularly in China.
This was revealed via a joint statement by both companies on Tuesday.
The two Japanese automobile companies had earlier agreed in the month of March, to explore a strategic partnership focused on EVs.
The statement read, “As announced in March of this year, Honda and Nissan are exploring various possibilities for future collaboration, leveraging each other’s strengths.”
As the automobile industry shifts from gasoline and diesel to electric vehicles, many car manufacturers face heightened competition, with Chinese production surging.
Honda and Nissan have not denied the report, but they have said that it is not an official declaration from either firm.
The conversations are reported to be in their early stages, and there is no guarantee that a deal will be reached.
The two corporations are anticipated to make an official announcement about their negotiations as early as next week.
A prospective merger between Japan’s second and third largest automakers could raise various hurdles.
Any proposed sale in Japan is likely to receive intense political scrutiny, particularly if it involves considerable job losses.
Nissan may also need to face the breakdown of its cooperation with French carmaker Renault.
Honda and Nissan strengthened their relationship in August, pledging to collaborate on battery technology and other advancements.
They also reached a deal with Mitsubishi Motors to explore collaboration on intelligence and electrification projects.
Nissan and Honda may eventually include Mitsubishi in any future collaborations.
Both automakers are seeing diminishing market share in China, which accounted for roughly 70% of global EV sales in November.
The two brands collectively sold 7.4 million vehicles worldwide in 2023 but are finding it challenging to compete with more affordable EV manufacturers like BYD, which has experienced a dramatic increase in quarterly revenues, surpassing Tesla for the first time in October.
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