Japanese automakers Honda & Nissan explore alliance

Honda and Nissan, Japan's second and third-largest automakers, are in talks to deepen their partnership. The discussions, reported by Nikkei, aim to create a formidable domestic rival to Toyota and other global automakers. With a net worth of $54 billion, the combined entity would become the third-largest global auto group by vehicle sales, surpassing both Ford and General Motors.

This potential deal comes when both companies face increased pressure from the electric vehicle price war and are looking for ways to reduce costs and accelerate development. Shares of Nissan surged more than 22 per cent following the report, while Honda's stock declined by 2.3 per cent. If the merger were to happen, the combined group would exceed the previous record merger between Fiat Chrysler and PSA group in 2021 to create Stellantis.

The talks also include a possible partnership with Mitsubishi Motors, in which Nissan holds a 24 per cent stake. This move could reshape the Japanese automotive landscape and provide a new axis of competition against Toyota, which has long dominated the domestic market. In addition, Honda and Nissan are exploring ways to collaborate on key components for electric vehicles and artificial intelligence in automotive software platforms.

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Nissan, in particular, is under financial pressure, having announced plans to cut 9,000 jobs and reduce its global production capacity by 20 per cent. While the talks are still ongoing and no official deal has been announced.