Nissan, Honda plan to merge by 2026

The Japanese automakers will consider integrating their businesses to create what would be the world's third largest car manufacturer, the companies said Monday. Nissan and Honda last week said they were discussing ways to collaborate more closely but denied reports of a merger. The businesses said in a joint statement Monday their possible merger is a way to stay competitive and deliver more attractive products to consumers. Combining resources could help the carmakers deliver vehicles neither could produce alone, said Nissan CEO Makoto Uchida. The auto giants expect to finish discussions by the end of 2025 and create a joint holding company in 2026.

Have the businesses collaborated before? Nissan and Honda in March signed an agreement to consider a strategic partnership in electric vehicle production. In August they discussed sharing EV components. Nissan last month rolled out cost savings plans after reporting a significant decline in revenue.

What about Mitsubishi? Nissan and Honda also signed a memorandum of understanding with Mitsubishi Motors to explore the possibility of how Mitsubishi could participate or be involved with the company resulting from the merger. Nissan currently owns about a 24% stake in Mitsubishi Motors, after Mitsubishi bought back about 10% of its stock in November. Before that, Nissan owned a controlling interest of 34%. In the past, Nissan, Mitsubishi, and French automaker Renault have collaborated on vehicles in an alliance.

Dig deeper: Listen to Mary Muncy’s report on The World and Everything in It about how electric vehicles require mineral mining that is not yet regulated to prevent long-term damage to land.