• Merger talks between Honda and Nissan might begin
• The merger would put the automakers under holding company
• The merger could be a lifeline for Nissan

Honda and Nissan are close to starting merger talks aimed at fending off electric-vehicle competition, reports Nikkei.

The Japanese news daily reported on Tuesday that Honda and Nissan are close to signing a memorandum of understanding as a first step toward merger talks, with Mitsubishi potentially joining as a third partner. Nissan already owns approximately 34% of Mitsubishi shares, and there has been some platform sharing between the two automakers.

The current plan is for the merged automakers to operate under a holding company, according to the report, which cites competition from Tesla and Chinese automakers in the EV segment as one of the main factors behind the merger talks.

This follows a March announcement by Honda and Nissan of a memorandum of understanding for a “strategic partnership in the fields of vehicle electrification and intelligence” expected to cover EVs, hybrids, and software. Mitsubishi was tipped to join that partnership in August. The current alliance between Nissan, Mitsubishi, and French automaker has also collaborated with Honda in the past, most recently on the Altna battery-leasing joint venture.

Combined sales of Honda and Nissan in 2023 were totaled more than 8 million vehicles. That would make the merged automaker the third largest by sales volume after Toyota and the Volkswagen Group, which sold 11.2 million and 9.2 million vehicles in 2023, respectively.

A full merger would likely be a needed lifeline for Nissan. The automaker in October announced plans to lay off approximately 9,000 employees, representing 6.7% of its global workforce, and cut production capacity by 20% due to declining sales, primarily in the U.S. and China.

2025 Honda Civic Hybrid

Both automakers are in the midst of an EV reset, with Honda preparing to roll out its 0 Series starting in 2026 and Nissan preparing a next-generation Leaf, as well as larger models for assembly in Mississippi.

Hybrids could present more immediate opportunities for integration. Honda’s two-motor hybrid system could replace Nissan’s e-Power hybrid system, which still hasn’t made it to the U.S. after years of discussion. Nissan, meanwhile, could take the lead in electrifying pickup trucks and SUVs—including the body-on-frame models Honda currently lacks.