Honda and Nissan in merger talks

What happened

Honda and Nissan said Wednesday they are exploring merging their companies, deepening a collaboration between Japan's No. 2 and No. 3 automakers that started in March. Both companies are losing ground in China, the world's largest auto market, and struggling to keep up with Tesla and China's BYD in the global race to produce affordable electric vehicles.

Who said what

In a joint statement, Honda and Nissan said they were "considering various possibilities for future collaboration, but no decisions have been made." A combined Honda-Nissan would be the world's third-largest automaker by production, sales and market capitalization, after Toyota and Volkswagen.

A merger would allow Honda and Nissan to "seek synergies in purchasing and technology development, but it would also present challenges for two companies with different cultures and partly overlapping vehicle lineups," The Wall Street Journal said. Honda "has long pursued a go-it-alone approach," The New York Times said, but the high investment costs in pivoting to battery-powered vehicles has "led it to seek partnerships."

The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

Join more than 350,000 subscribers and keep yourself informed with a selection of The Week’s most interesting, enlightening and entertaining stories - plus daily puzzles.

Join more than 350,000 subscribers and keep yourself informed with a selection of The Week’s most interesting, enlightening and entertaining stories - plus daily puzzles.

Sign up

What next?

Nissan and Honda were "expected to sign a memorandum of understanding within the next week to formally begin discussions of partnership-broadening steps," the Times said, "including the details of a potential merger."