Nissan Motor's stock price experienced a historic surge on Wednesday, jumping 23.7% following reports of a possible merger with Honda Motor. This marked Nissan's strongest single-day performance since at least 1985, while Honda's shares declined 3%.
According to Japanese newspaper Nikkei, the two automakers are exploring the creation of a holding company structure and may soon sign a memorandum of understanding. The potential deal could later expand to include Mitsubishi Motors, where Nissan holds a 24% ownership stake.
The merged entity would produce over 8 million vehicles annually, positioning it among the world's largest automakers, though still behind Toyota's 11.2 million and Volkswagen's 9.2 million units in 2023.
Nissan issued a statement indicating that while it is exploring various collaboration possibilities with Honda and Mitsubishi Motors, no definitive decisions have been made regarding business integration.
Industry experts suggest the merger talks stem from Nissan's recent financial challenges. The company reported disappointing second-quarter results in November, reducing its full-year outlook and announcing 9,000 job cuts alongside production capacity reductions.
The potential merger comes as global automakers face mounting pressures, including the costly transition to electric vehicles and competition from Tesla and China's BYD. A combined Honda-Nissan operation could share technology development costs and achieve greater economies of scale across traditional combustion engines, hybrids, and electric vehicles.
The news follows an earlier 2024 agreement between the two companies to collaborate on automotive components and software. If realized, this would represent the automotive industry's largest merger since the 2021 creation of Stellantis through the combination of Fiat Chrysler and PSA Groupe.
Mitsubishi Motors shares also responded positively to the news, closing up 19.7%.
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