Honda and Nissan, the second and third-largest carmakers in Japan after Toyota, are reportedly considering a merger which would see them operate under a single holding company and challenge their compatriot, the largest carmaker in that country.

The firms will sign a memorandum of understanding soon, the reports also said, adding that Mitsubishi Motors, another Japanese carmaker, could also be brought under the holding company to create one of the world’s “largest auto groups.”

Nissan is the top shareholder in Mitsubishi.

Both Honda and Nissan issued statements in response to the reports.

“We are discussing possibilities for cooperation between Honda and Nissan in the future, in a wide range of fields and in various areas, and those possibilities include the latest reports, but there is nothing decided,” a Honda spokesperson told news agency AFP.

Nissan told the news agency, “The content of the report is not something that has been announced by either companies. As announced in March of this year, Honda and Nissan are exploring various possibilities for future collaboration, leveraging each other’s strengths. If there are any updates, we will inform our stakeholders at the appropriate time.”

In March, the two companies agreed to explore a “strategic partnership” on electric vehicles, a move analysts said was aimed at catching up with Chinese competitors.

In 2023, China overtook Japan as the world’s biggest vehicle exporter, helped by its dominance in electric vehicles (EV).

In May, Honda revealed plans to double its investment in EVs to $65 billion by 2030, part of an ambitious target set three years ago of achieving 100 % EV sales by 2040.

Nissan, which slashed 9,000 jobs in November and slashed its annual sales forecast, said in March that 16 of the 30 models it plans to launch over the next three years would be “electrified”.

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