Nissan and Honda in Talks for Closer Collaboration, Not a Merger

Japanese automakers Nissan Motor Corp. and Honda Motor Co. confirmed Wednesday that they are discussing closer collaboration but denied reports they have decided on a merger.Nissan's share price soared nearly 24% in Tokyo after reports citing unnamed sources said it might merge with Honda to form the world's third-largest automaking group. Honda's share price fell as much as 3%. Nissan alliance member Mitsubishi Motors Corp. is also part of the talks.

Trading in Nissan's shares was suspended but then resumed after the companies jointly issued a statement saying they were 'considering various possibilities for future collaboration, but no decisions have been made.' An industry shakeupThe ascent of Chinese automakers is rattling the industry at a time when manufacturers are struggling to shift from fossil fuel-driven vehicles to electrics. Relatively inexpensive EVs from China's BYD, Great Wall and Nio are eating into the market shares of U.S. and Japanese car companies in China and elsewhere.Japanese automakers have lagged behind big rivals in EVs and are now trying to cut costs and make up for lost time.Nissan, Honda and Mitsubishi announced in August that they will share components for electric vehicles like batteries and jointly research software for autonomous driving to adapt better to dramatic changes in the auto industry centered around electrification. A preliminary agreement between Honda, Japan's second-largest automaker, and Nissan, third largest, was announced in March.A merger could result in a behemoth worth about $55 billion based on the market capitalization of all three automakers.Joining forces would help the smaller Japanese automakers add scale to compete with Japan's market leader Toyota Motor Corp. and with Germany's Volkswagen AG. Toyota itself has technology partnerships with Japan's Mazda Motor Corp. and Subaru Cor

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