TOKYO: Honda Motor Co and Nissan Motor Co are reportedly in discussions about a potential merger that could create the world's third-largest automaker group by volume.
The move comes amid intense global competition in the electric vehicle (EV) market, currently dominated by US-based Tesla Inc and Chinese automakers like BYD Co, Kyodo news agency reported according to a source familiar with the matter.
The merger would involve establishing a holding company, the source said, aiming to form a strategic alliance with rival industry leaders Toyota Motor Corp and Volkswagen AG.
Combined sales, including Mitsubishi Motors Corp, a Nissan partner, could reach around 8.0 million vehicles annually.
Honda, Nissan and Mitsubishi issued a joint statement confirming they are "considering various possibilities for future collaboration," but clarified that no decisions have been made yet.
Honda and Nissan began exploring a strategic partnership in EV production and software technologies earlier this year. Talks with Mitsubishi Motors joined in August, focusing on cost reduction and enhancing competitiveness.
In August, Honda President Toshihiro Mibe stated that discussions did not yet involve a capital tie-up, though he did not rule out such a possibility in the future.
Global automakers face mounting challenges in securing funds for EV development, primarily due to high battery costs and the extensive resources required for advanced technologies like autonomous driving.
Following media reports of the potential merger, trading of Nissan shares was briefly halted by the Tokyo Stock Exchange on Wednesday morning. Trading resumed after the companies issued their statement.