Honda in talks with Nissan over possible merger

This is a breaking story — please check back for updates.

Last updated: Dec. 17, 2:34 p.m. ET

According to the Nikkei Asia newspaper, Japanese automakers Nissan and Honda reportedly plan to start negotiations for a merger in order to better compete on the global EV stage.

The stakes are high: Honda and Nissan are bleeding market share in China and Southeast Asia as Chinese EV makers flood the market with affordable, government-backed options.

• Honda’s China sales have cratered by 30% this year, while Nissan’s fell 10%.

• Both companies have already trimmed capacity. Honda cut global production by 10%, including its first reduction in China, while Nissan slashed capacity by 20% and cut nearly 10% of its workforce.

• In addition to pressure from Chinese manufacturers, Nissan, Honda and Mitsubishi are also facing an opposing alliance in their home market.

• Toyota, Mazda and Subaru have already formed a partnership with the goal of lowering electrification costs while developing new, lower-emission internal combustion engines.

Looking ahead: Neither company has confirmed or denied the report, although Honda has said it will notify shareholders of any updates at an appropriate time. However, according to Nikkei, Honda and Nissan are already working on a memorandum of understanding and plan to work together under a holding company.

• Honda, Nissan and Mitsubishi have a combined annual sales total of roughly 8 million vehicles. They have also collaborated frequently in the past, forming a partnership to share vehicle parts and software earlier this year.

• If all three join forces, the resulting conglomerate would be one of the world’s biggest automakers, although it would still lag behind Japan’s No. 1 car company, Toyota, by about 3 million units.

Why it matters: Honda and Nissan see the writing on the wall — staying competitive in an EV-driven future requires scale, shared resources, and speed.

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