Japanese automakers Nissan and Honda discuss merger

Honda and Nissan are talking about a merger, reports the Japanese business newspaper Nikkei. The report has not been contradicted by the two automakers.

A merger would allow Honda and Nissan to better compete with Chinese manufacturers. They appear to be better and faster at developing electric cars.

The two Japanese automakers together could also better absorb the consequences of disappointing sales. Nissan already presented plans last month to reduce production by 20 percent. An announced reorganization at Nissan would cost 9,000 jobs.

Nissan and Honda announced in March that they would jointly develop electric cars. A full merger would create the world’s third largest automaker in size, after Toyota and Volkswagen.

Nissan was saved from financial ruin at the end of the last century by Renault, which took over a large part of the company. Renault is now reducing its stake in Nissan to more than a third of the shares.

Nissan, in turn, owns more than a quarter of Mitsubishi. That brand could join the newly formed merger company.

A merger could face political resistance in Japan because it could lead to major job losses. This is what someone with knowledge of the negotiations told the business newspaper Financial Times.

Car market expert Wim Oude Weernink sees good opportunities for a merger company. “Scale increase is very important for the Japanese car industry. Toyota has already done that, with major financial interests in Mazda, Subaru and Suzuki. Honda is doing very well and, in addition to cars, also makes motorcycles and all kinds of power tools such as lawn mowers. But Nissan is a bit alone.”

Oude Weernink anticipates that a merger could lead to a better balanced range of models. “Like Toyota, Honda has mainly focused on hybrid propulsion. While Nissan is a forerunner in developing electric cars, such as the Nissan Leaf, which was already available before Tesla became big.”