Honda and Nissan Potential Merger

Investing.com— Honda Motor Co Ltd (TYO:7267) and Nissan Motor Co., Ltd. (TYO:7201) are aiming to finalize the terms of a potential merger by June 2025, as reported by Japanese broadcaster NHK on Monday.

Honda (NYSE:HMC) and Nissan (OTC:NSANY) have signed a basic merger agreement and are set to hold a press conference later to announce the deal. The goal is to finalize the merger by June 2025.

Mitsubishi Motors Corp. (TYO:7211), in which Nissan is the largest shareholder, is also considering joining the merger.

The plan involves establishing a holding company to facilitate the merger, which could create the third-largest automobile maker globally by sales.

The discussions come as Honda and Nissan face declining overseas sales, particularly in the crucial Chinese automobile market. The increasing demand for electric vehicles (EVs) in China, along with a price war involving Tesla (NASDAQ:TSLA) and its Chinese competitors, has negatively impacted the market share of both companies. Additionally, softer demand for new vehicles in the U.S. and Europe has further eroded sales.

Following the merger news, shares of Honda, Nissan, and Mitsubishi rose between 1.3% and 3%, with Nissan's shares experiencing a sharp rally the previous week following initial reports of the merger.