A Honda-Nissan Merger Might Be Imminent

A merger might be in store for Japan's second- and third-largest carmakers. Honda and Nissan on Wednesday confirmed reports that they are in talks about ways to work more closely together. Sources previously told the New York Times the two automakers are considering a merger, though the AP reports that in confirming the reports, Honda and Nissan downplayed just how close they are to firming up a decision to merge. In the Wall Street Journal's telling, the companies confirmed they are in discussions about future collaborations, and that a merger is one possibility. More:

• The companies have already been collaborating this year, working on electric vehicle development along with Mitsubishi (about 25% of which is owned by Nissan). Reports indicate Mitsubishi may also be a part of the talks between Honda and Nissan.

• A merger would boost the companies' ability to compete with Japan's No. 1 automaker, Toyota. If Honda, Nissan, and Mitsubishi all merge, the resulting company would be the world's third-largest carmaker and would be worth an estimated $55 billion.
• The companies are also looking to better compete with Chinese automakers, which are experiencing a rapid rise, and with Tesla and other EV automakers. Both Honda and Nissan are struggling with sales in China, where electric and hybrid vehicles are especially popular.
• After news of the discussions between the companies broke, Nissan's shares were up as much as 22% while Honda's were down as much as 3%. Both automakers have been struggling financially; Nissan recently laid off 6% of its global workforce and Honda's profits fell almost 20% during the first half of the fiscal year compared to the same period a year ago.

(More Honda stories.)