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Two of Japan’s largest automakers, Honda and Nissan, are reportedly entering merger negotiations, as reported by the Nikkei newspaper. The talks aim to solidify their position in the rapidly changing global automotive market, where rising competition, high production costs, and the EV transition are reshaping the industry.

The potential merger would create a holding company for Honda, Nissan, and Mitsubishi Motors, of which Nissan already holds a 24% stake. Combined, these automakers would account for over 8 million vehicle sales annually—enough to challenge global giants like Toyota (11.2 million vehicles sold in 2023) and Volkswagen (9.2 million vehicles sold last year).

For now, both automakers have neither confirmed nor denied the report. Honda stated: “The reported content was not released by our company… We will inform our stakeholders of any updates at an appropriate time.” This cautious tone reflects the sensitive nature of the negotiations, but one thing is clear: if this merger proceeds, it will mark one of the largest shakeups in the auto industry since Fiat Chrysler merged with PSA Groupe to form Stellantis in 2021.

Nissan’s Dire Situation

While Honda enters these talks from a position of strength, Nissan’s struggles have been front and center. Earlier this year, Nissan reported a 99% drop in operating profits in the North American market. The automaker’s woes stem from:

• Higher Prices: Sticker shock has pushed buyers toward competitors.
• Falling Reliability: Consumer trust has waned in key models.
• Tough Competition: Toyota, Hyundai, and Kia continue to dominate Nissan’s segments.

Adding to the urgency, Nissan reportedly has just 12 to 14 months of cash reserves left. To stay afloat, Nissan has drastically increased incentives to lure buyers. Popular models like the Rogue, Altima, and Pathfinder are now offered with deals like 0% APR financing and cheap lease specials—a trend we expect to continue well into 2025.

Honda Stands Strong
In contrast, Honda’s financial health remains robust. International sales are growing steadily, and U.S. demand for Honda models, like the CR-V and Civic, remains strong. Unlike Nissan, Honda hasn’t needed to lean heavily on incentives to maintain momentum. 

What This Means For Car Buyers in 2025

The Honda-Nissan merger talks come at a crucial moment for car shoppers. Here’s what you need to know:

1. Expect Big Nissan Deals to Continue: Nissan’s financial troubles mean ongoing incentives like 0% APR, cash discounts, and cheap leases on remaining 2024 and incoming 2025 models.
2. Honda Pricing Will Remain Firm: Honda is holding strong. Don’t count on significant discounts unless the merger drastically shifts their strategy.
3. Mitsubishi’s Future Is Uncertain: If included in the merger, Mitsubishi could see sweeping changes, potentially phasing out less competitive models.

The automotive market is evolving fast, and buyers stand to benefit from brands under pressure. Nissan, in particular, will remain highly negotiable as it fights to stay competitive. Stay tuned to CarEdge News for up-to-the-minute insights on deals, trends, and automotive news that matter to you.