Honda and Nissan are in merger talks

CNN
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Honda and Nissan are discussing a possible merger, potentially bringing together two Japanese automakers that have recently fallen on hard times.

The companies said in the statement that they have been in talks, but they offered no details or time frame for when a deal — should one develop — might be completed. It is also not clear what form the possible joint venture could take. Nikkei first reported the news of a potential tie-up on Tuesday.

“As announced in March, Honda and Nissan are exploring various opportunities for future collaboration and leveraging each other’s strengths,” the companies said in a statement on Tuesday. “If there are any updates, we will inform our stakeholders at an appropriate time.”

In March, Honda and Nissan announced they would collaborate on electric cars, and in August they said they would collaborate on battery technology. But they could benefit from deepening their bond as both have faced challenges this year.

Both companies, like many non-Chinese automakers, have struggled in the once-promising Chinese market, the world’s largest market for cars. Chinese consumers had flocked to foreign brands, but have largely switched to domestic brands, which have better perceived value in the country. China’s government has also provided incentives to help accelerate customer adoption of electric vehicles and plug-in hybrids.

Although both companies offer electric cars and plug-ins – Nissan in particular was a pioneer in electric car technology – Chinese brands such as BYD have eclipsed their technology and are cheaper.

Nissan has also struggled since its former CEO, Carlos Ghosn, became a refugee, fleeing Japan for his native Lebanon. Ghosn was arrested in Tokyo in 2018 on suspicion of financial misconduct and Nissan fired him. Ghosn has repeatedly denied the allegations.

His ouster shook the powerful car-making alliance between Nissan, Renault and Mitsubishi. Renault, once the largest car-making partnership in the world, has since sharply reduced its stake in Nissan, weakening the Japanese carmaker.

Nissan said its operating income between March and September fell 90% from the same period a year earlier.

Meanwhile, Honda, which is about five times the size of Nissan, also faces challenges. The company announced plans to sell only zero-emission vehicles in major markets by 2040. But the transition has been slow as relatively low gas prices, inadequate charging infrastructure and increased competition have dragged down demand for electric cars in the US and Europe.

CNN’s Ramishah Maruf contributed to this report.