Honda and Nissan in merger talks

Nissan's Makoto Uchida and Honda's Toshihiro Mibe shake hands on collaboration

Nissan's Makoto Uchida and Honda's Toshihiro Mibe shake hands during a press conference

(Image credit: Kiyoshi Ota / Bloomberg via Getty Images)

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."

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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."

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Peter has worked as a news and culture writer and editor at The Week since the site's launch in 2008. He covers politics, world affairs, religion and cultural currents. His journalism career began as a copy editor at a financial newswire and has included editorial positions at The New York Times Magazine, Facts on File, and Oregon State University.