By Peter Landers

Japanese carmakers Honda and Nissan said they were exploring a merger following business troubles at Nissan in the U.S. and China.

Confirming a report in the Nikkei newspaper, the two companies said Wednesday they were in talks over a merger or other future collaboration. They said no final decision has been made and didn't offer details.

The two companies, longtime rivals, have grown closer recently and are working together on electric technologies, seeking to share the high development costs.

Both are struggling in China after being caught flatfooted by the Chinese market's rapid shift to electric vehicles and plug-in hybrid vehicles. Nissan has also posted weaker results in the U.S. A combination would allow Honda and Nissan to seek synergies in purchasing and technology development, but it would also present challenges for two companies with different cultures and partly overlapping vehicle lineups.

Nissan has never fully recovered from the arrest of its then-chairman, Carlos Ghosn, in November 2018, which followed internal tension over Nissan's alliance with Renault of France. Ghosn was charged in Tokyo with financial crimes, which he denied, and escaped from Japan in December 2019 on a private jet before his trial began.

Renault took a more than one-third stake in Nissan in 1999, later raised to 43%. Nissan, which was long the larger and more profitable of the two partners, chafed under the alliance and finally won its independence last year when Renault reduced its stake to 15%.

But Nissan's fortunes turned downward this year. Operating income in the half-year ending Sept. 30 was down 90% from the previous year.

Write to Peter Landers at Peter.Landers@wsj.com

(END) Dow Jones Newswires

December 17, 2024 19:24 ET (00:24 GMT)

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