Japanese auto giants Honda and Nissan have announced merger plans.
That would make it the third-largest automaker in terms of sales, behind Toyota Motor Corp and Volkswagen AG.
The two corporations said they had signed a memorandum that would also enter into integration negotiations with the smaller member of the Nissan Alliance, Mitsubishi Motors.
Japanese automakers are struggling to compete with their big rivals in the electric vehicle (EV) space and must cut costs.
If the merger is completed, it can create business value of more than $50 billion (£39. 77 billion) in the market capitalization of the 3 carmakers.
Honda will first lead the new management, which will retain the principles and brands of each company, said Honda President Toshihiro Mibe.
The goal is for the agreement to be finalized by August 2026, he said, although he added that it was imaginable that it would not be approved.
Mibe said there were “points that want to be studied and discussed” related to the merger. “Frankly, the option of this not being implemented is not zero. “
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Despite the potential deal that would make the new company an industry giant, it would still fall behind Toyota as Japan’s largest automaker.
Toyota has deployed 11. 5 million cars in 2023, Honda, Nissan and Mitsubishi Motors combined about 8 million.
This comes after the three companies announced in August that they would share electric vehicle parts, such as batteries and joint software for autonomous driving.
Nissan has struggled under the weight of a scandal that began with the arrest of its former chairman Carlos Ghosn in late 2018 on charges of fraud and misuse of company assets – allegations that he denies. He eventually was released on bail and fled to Lebanon.
He said the planned merger was a “desperate move”.
Meanwhile, in Europe, car companies have been cutting jobs and shutting factories as they face pressure from growing exports from China, Sky News’ economics and data editor Ed Conway reported this month.