Honda and Nissan possibly merging

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Honda and Nissan have formally agreed to hold talks over the next six months on a possible merger, a deal that would create the world’s third-largest automaker and give them more resources to compete with a growing threat from Chinese carmakers.

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But with the cost and challenges of the industry’s efforts to shift from gasoline-powered cars and trucks to electric vehicles and with rising competition from Chinese automakers, which have moved past most Western automakers in those efforts, Honda and Nissan needed to combine resources in order to remain competitive.

“Today marks a pivotal moment,” Nissan CEO Makoto Uchida said in a statement announcing the negotiations. “Together, we can create a unique way for (customers) to enjoy cars that neither company could achieve alone.”

Nissan has struggled since the collapse of its alliance with Renault, facing severe financial problems that put it in desperate need of a larger merger partner.

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Profits in six months ending in September plunged 94% compared with the same period in 2023, as the company lost money on auto operations and reported only a narrow profit due to its financing business. In response, Nissan announced it would cut its manufacturing output by 20%, laying off 9,000 workers as a result. It also slashed its forecast for full-year operating profit by 70%.

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