Nissan and Honda rally as investors see upside from potential powerhouse merger

Nissan Motor Co. (OTCPK:NSANY) added 11.5% in Tuesday trading and Honda Motor (NYSE:HMC) rose 1.0% after a report indicated the two Japanese automakers are in merger talks.

The deal structure being discussed includes Nissan (OTCPK:NSANY) and Honda (HMC) bringing in Mitsubishi Motors, of which Nissan (OTCPK:NSANY) is the top shareholder, under a nearly created holding company to house the brands of all three automakers. The combination would make the auto group the third largest in the world by revenue, behind Volkswagen (OTCPK:VLKAF) and Toyota (TM).

“It is important to prepare for the increasing pace of transformation in mobility in the mid-to-long-term,” stated Nissan (OTCPK:NSANY) CEO Makoto Uchida earlier this year. Regarding the merger report, both companies issued a statement reiterating they were exploring various possibilities for future collaboration, leveraging each other’s strengths.

Analysts think the merger discussions signal that the Japanese automakers are looking for ways to not get left behind as EV makers like Tesla (TSLA), BYD Company (OTCPK:BYDDF), Nio (NIO), Li Auto (LI), and XPeng (XPEV) grow their market share.