A Nissan Motor Co. dealership, left, and a Honda Motor Co. dealership in Tokyo, Japan, on Monday, Dec. 23, 2024. (Kiyoshi Ota/Bloomberg via Getty Images)
Honda and Nissan agreed to consider a merger that would form the world’s third-largest automaker by sales.
The Japanese companies signed a memorandum of understanding on Monday and Mitsubishi Motors Corp. had agreed to join the discussions to combine their businesses.
What would the merger mean for the auto industry?
Japanese automakers have fallen behind big rivals in electric vehicles and are now trying to cut costs.
Nissan, Honda, and Mitsubishi announced in August that they will share parts for electric vehicles like batteries and research software for autonomous driving to adapt better to dramatic changes in the auto industry.
RELATED: Nissan, Honda announce merger plans, which would create world’s No. 3 automaker
A merger could result in a group worth over $50 billion. Honda, Nissan, and Mitsubishi could compete with Toyota Motor Corp. and with Germany’s Volkswagen AG. The Associated Press reported that Toyota has technology partnerships with Japan’s Mazda Motor Corp. and Subaru Corp.
The Associated Press reported that Nissan has experience building batteries and electric vehicles, and gas-electric hybrid powertrains that may assist Honda in creating its own electric vehicles and next generation of hybrids.
What does this mean for consumers?
The possible merger of the automakers could affect consumers looking for a new car.
According to Car Edge, an online car buying service, Nissan may offer shoppers incentives on cars like cash discounts and affordable leases on remaining 2024 vehicles and new 2025 model cars.
However, Honda’s prices for cars aren’t expected to change unless the merger with Nissan significantly changes their business strategy.
If Mitsubishi is included in the merger with Nissan and Honda, the automaker could have substantial changes, possibly eliminating less competitive car models in its inventory.
Additionally, Brian Moody, executive editor at Autotrader and Kelley Blue Book, tells FOX Business that this deal impacts consumers from the standpoint that he could see the value in smaller, less expensive electric cars coming from the merger.
“I could even see a merger or a partnership like this resulting in a low-cost sub brand,” he said. “Because that’s what we’re hearing, is that a lot of people, a lot of consumers, are saying, ‘You know, new cars are just too expensive. I can’t buy a new car.'”
