Japanese automobile giants Honda and Nissan have announced plans to merge.
That would make it the third-largest automaker by sales, behind Toyota Motor Corp and Volkswagen AG.
The two companies announced that they had signed a memorandum of understanding that would also include smaller companies. Nissan Alliance member Mitsubishi Motors is participating in the integration negotiations.
Japanese automakers are struggling to compete with their larger rivals in the electric vehicle (EV) space and are trying to cut costs.
If the merger is completed, it could create a business worth more than $50 billion (£39.77 billion) based on the market capitalization of the three carmakers.
Honda President Toshihiro Mibe speaks at a joint press conference with Nissan and Mitsubishi. Photo: AP
Honda would initially lead the new management, which would retain the principles and brands of each company, said Honda President Toshihiro Mibe.
The goal is for the deal to be finalized by August 2026, he said, but added that it was possible it would not go through.
Mr Mibe said there were “points that need to be studied and discussed” regarding the merger. “Frankly, the possibility 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 lag behind Toyota as Japan’s top automaker.
Toyota has deployed 11.5 million vehicles in 2023, Honda, Nissan and Mitsubishi Motors combined for around eight million.
This comes after the three companies announced in August that they would share electric vehicle components like batteries and jointly research software for autonomous driving.
Nissan is suffering 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 he denies. He was eventually released on bail and fled to Lebanon.
He said the planned merger was a “desperate decision”.
Meanwhile, in Europe, automakers have cut jobs and closed factories. coping with pressure from China’s growing exportsSky News’ economics and data editor Ed Conway reported this month.