Honda and Nissan joint venture could lead to merger

Reports from Japan say its second and third largest car makers - Nissan and Honda - are in talks about a possible merger as they struggle to find a competitive edge in the challenging global market.

The two firms agreed to co-operate on EV projects back in March, as a response to the twin threats of a booming Chinese car market and slower than anticipated consumer demand for battery-powered vehicles.

It’s believed that an official statement will be made next week on the prospects for a merger, but reports suggest it could be a difficult pill to swallow for the Japanese government because it would be likely to result in significant domestic job losses under any rationalisation plan. Nissan is also part of an alliance with Renault, a relationship that would also have to be unpicked.

So far, the Nissan and Honda relationship has been limited to an agreement to work together on batteries and technology, while in the summer the pair extended that relationship to include an agreement to share EV “intelligence and electrification” with Mitsubishi Motors.

The picture is further clouded by reports - yet to be confirmed or denied - that Foxconn, the manufacturer of the iPhone has also approached Nissan with a view to taking a majority stake in the firm.

Nissan and Honda have both issued similar statements saying “if there are any updates, we will inform our shareholders at the appropriate time”.

Nissan shares have risen on the news, while Mitsubishi’s jumped 20 per cent. Honda fell back slightly though.

Honda and Nissan sold 7.4 million vehicles between them last year, but they’re losing market share in China, which is the biggest global EV market.