There may be a little less competition in the auto industry as Nissan and Honda agree to discuss a merger.
The two companies signed a memorandum of understanding on Monday, The Associated Press reported. The impending merger will allow them to standardize vehicles and increase production, The New York Times reported.
Honda and Nissan will create a joint holding company with Honda taking the lead. The merger agreement is slated to be in place by June and the deal finalized, with the company being listed on the Tokyo Stock Exchange by August 2026.
Mitsubishi Motors, an alliance member of Nissan, will be part of the discussions.
Honda is Japan’s second-largest automaker while Nissan is third, The New York Times reported.
The companies hope the merger will help them compete in the industry that has evolved into electric cars and autonomous driving. The merger will allow them to work together on research and development, Honda’s chief executive Toshihiro Mibe said, according to the newspaper.
“Current business models are being upended. It is not going to take 10 to 20 years for that to happen, it will come much faster,” Mibe said. “We need to have the right artillery in order to be competitive on that battlefield so we’re starting today.”
But when President-elect Donald Trump once again takes office next month, he has pledged to get rid of E.V. tax incentives forcing automakers to continue producing traditional gas-powered vehicles.
“To sustain these dual investments, automakers need scale and the operational efficiencies that come with it,” Takaki Nakanishi, the head of Nakanishi Research Institute said, according to the Times. “If Nissan and Honda are not able to achieve this, they will not survive. Times are truly that tough.”
Nissan sells more than 3 million vehicles annually. Honda sells almost 4 million.
When the merger goes through it will make the company the third largest in terms of sales.
Toyota is number one while Volkswagen was number two in 2023, according to Statista.
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