Nissan, Honda Expect Strategic Merger to Rival Toyota

Nissan Motor Co. and Honda Motor Co. have started discussing a merger as both companies are looking forward to competing with Toyota, which is the world's largest carmaker. The merger will, therefore, create a stiffer competitor in the global automobile market. Both firms believe that their coming together would help them in facing strong competition across the globe, especially in the electric vehicle sector.

Shares of Nissan Rise

The stock of Nissan increased by 24% after the rumor of its possible merger. This is the highest the company has ever had after one day. It therefore indicates how excited the investors are about the deal.

Options for Partnership

According to reports, Honda Cars India is now pondering a full merger, capital tie-up, or setting up a new holding company for controlling the businesses that would be merged. Shinji Aoyama, Executive Vice President at Honda, confirms that the two companies are talking, but they were unable to mention the date of finalizing their decision. The two companies is expected to have finalized a decision by December 23, but shares of Honda declined 3.4% with the news.

Possible Involvement of Mitsubishi

Mitsubishi Motors had already entered into a financial tie-up with Nissan. Therefore, is also in the list whose stocks rose upwards to 17%. However, the talks being held for the discussions are still in the early stage. There will be no signing off any deal at the soonest time.

Why Merging is the Best Conclusion

Experts believe that the merger will make both companies stronger and come out to be a total automobile. According to Vivek Vaidya, the Senior Vice President of Frost & Sullivan, the merged company will better compete globally. The two groups will be there as Japan's auto industry shrinks into two: the first one will be headed by Honda, Nissan, and Mitsubishi, while the other will be led by Toyota.

Competition in the Global Market

Nissan and Honda have been attempting to sever their dependency on other car manufacturers. Nissan has been attempting to loosen up its ties with Renault, and Honda has been distancing itself from General Motors. A merger would help both companies have stronger resources to counter competition, particularly in an emerging electric vehicle market where Tesla is becoming a more dominant force.

Future Outlook

A merger can significantly be a welcome respite, financially speaking, to Nissan. Companies are also considering cooperation in using electric vehicle batteries and software. One can expect further information in days ahead as the negotiations are continuing.