Honda and Nissan In Merger Talks

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Major Japanese automakers Honda Motor Co. and Nissan Motor Co. are arranging talks on a merger, a source familiar with the matter said Wednesday, amid fierce global competition in electric vehicles and other sectors.

Japan's second and third largest automakers are considering the possibility of establishing a holding company, the source said, in an apparent bid to form a global automobile alliance to challenge Chinese and U.S. EV makers, such as Tesla Inc.

Honda and Nissan agreed in March to commence a feasibility study on a strategic partnership in EV production and software technologies to cut costs and improve competitiveness, with Mitsubishi Motors Corp. joining the talks in August.

At a press conference in August, Honda President Toshihiro Mibe said the talks did not involve a capital tie-up, although he did not deny such a possibility in the future.

Honda last month cut its net profit outlook for the current business year through March to 950 billion yen ($6.2 billion), which would represent a 14.2 percent decline from the previous year, due to weaker-than-expected auto sales in China.

Also in November, Nissan unveiled a plan to cut 9,000 jobs and reduce global output capacity by 20 percent, saying its business in the United States and China continued to struggle.