Honda and Nissan to Explore Merger, Forming Third-Largest Automaker

Honda and Nissan have agreed to explore a merger that would create the world's third-largest automaker by sales. The Japanese companies signed a memorandum of understanding on Monday, with Mitsubishi Motors Corp. joining the discussions to combine their businesses. Japanese automakers have been struggling to keep up with larger rivals in the electric vehicle market and are now seeking cost reductions.

Nissan, Honda, and Mitsubishi announced in August that they would share parts for electric vehicles, such as batteries and autonomous driving software research, to better adapt to the rapidly changing auto industry. A merger could result in a group worth over $50 billion, allowing them to compete with Toyota Motor Corp. and Volkswagen AG. The Associated Press reports that Toyota has technology partnerships with Mazda Motor Corp. and Subaru Corp. Nissan's experience in building batteries and electric vehicles, as well as its expertise in gas-electric hybrid powertrains, could be valuable to Honda as it develops its own electric vehicles and next-generation hybrids. The potential merger could impact consumers looking for new cars. Car Edge, an online car buying service, suggests that Nissan might offer incentives like cash discounts and affordable leases on 2024 and 2025 model vehicles to attract buyers. However, Honda's prices are not expected to change unless the merger significantly alters its business strategy. If Mitsubishi joins the merger, substantial changes are possible, including the elimination of less competitive car models from their inventory

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