Nissan, Honda sign MoU, agree for talks on merger

Associated Press Tokyo: Japanese automakers Honda and Nissan have announced plans to join forces, forming world's third-largest automaker by sales. The two companies said they had signed a memorandum of understanding on Monday and that smaller Nissan alliance member Mitsubishi Motors also had agreed to join the talks on integrating their businesses. News of a possible merger surfaced earlier this month, with unconfirmed reports saying that the talks on closer collaboration partly were driven by aspirations of Taiwan iPhone maker Foxconn to tie up with Nissan, which has an alliance with Renault SA of France and Mitsubishi.

A merger could result in a behemoth worth more than $50 billion based on the market capitalisation of all three automakers. Together, Honda and the Nissan alliance with Renault SA of France and smaller automaker Mitsubishi Motors Corp. would gain scale to compete with Toyota Motor Corp and with Germany's Volkswagen AG. Toyota has technology partnerships with Japan's Mazda Motor Corp and Subaru Corp. Even after a merger Toyota, which rolled out 11.5 million vehicles in 2023, would remain the leading Japanese automaker. If they join, the three smaller companies would make about 8 million vehicles. In 2023, Honda made 4 million and Nissan produced 3.4 million.

Mitsubishi Motors made just over 1 million. Honda, Japan's secondlargest automaker, is widely viewed as the only likely Japanese partner able to effect a rescue of Nissan, which has struggled following 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. Nissan, Honda and Mitsubishi announced in August that they would share components for electric vehicles like batteries and jointly research software for autonomous driving to adapt better to dramatic changes centred on electrification, following a preliminary agreement in March.

From Nissan, Honda could get truck-based bodyon- frame large SUVs such as the Armada and Infiniti QX80 that Honda doesn't have, with large towing capacities and good offroad performance, Sam Fiorani, vice president of AutoForecast Solutions, told The Associated Press. Fitch Ratings recently downgraded Nissan's credit outlook to negative, citing worsening profitability, partly due to price cuts in the North American market. But it noted that it has a strong financial structure and solid cash reserves that amounted to 1.44 trillion yen ($9.4 billion).