HONDA Motor and Nissan Motor are looking to finalise a merger agreement as soon as June after negotiations begin later on Monday (Dec 23), Japanese broadcaster NHK said, citing an unidentified source.
The two automakers plan to create a holding company that would oversee both businesses, NHK said. A press briefing is expected on Monday afternoon after the pair hold board meetings.
Honda and Nissan are both facing significant challenges, with the latter in dire financial straits as a deluge of electric and hybrid vehicles from competitors in China forces legacy brands to pool resources.
Nissan is in greater need of a turnaround due to cratering sales in the US and China, which have forced it to slash jobs, cut production capacity and lower annual profit outlook by 70 per cent.
Talks were initially complicated by Taiwanese manufacturer Hon Hai Precision Industry, which reportedly expressed an interest in acquiring Nissan. But the iPhone maker known as Foxconn is pausing its pursuit for now to see how talks between the two Japanese companies unfold, a source familiar with the matter said last week.
An alliance between Honda and Nissan – which could also include Nissan’s junior partner Mitsubishi Motors – would effectively split Japan’s automobile industry down the middle, pitting the trio against Toyota Motor and its partnerships with Mazda Motor, Subaru and Suzuki Motor.
Honda and Nissan had already began laying the groundwork for a technical partnership earlier this year, announcing plans with Mitsubishi Motors to co-develop batteries, software and other electric vehicle technologies. BLOOMBERG
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