Honda explores Nissan rescue with merger plan

Honda Motor is in talks to come to the aid of Nissan Motor by potentially forming the world's third-largest carmaker in order to better withstand escalating challenges for the global auto industry.

The two Japanese manufacturers have engaged in merger discussions that appear to have accelerated after Foxconn, the Taiwan-based producer of iPhones, approached Nissan about acquiring a stake in the company, a person familiar with the matter said. Foxconn has been investing heavily in factories to build EVs.

Nissan shares - which had lost two-thirds of their value since the arrest of former chairman Carlos Ghosn in late 2018 - jumped a record 24%, the most in at least five decades, on Wednesday. Honda's stock fell 3% to its lowest closing price in over a year.

Nissan's years of simmering issues boiled over in early Nov, when the company slashed earnings forecasts and said it would have to cull 9,000 jobs globally. The automaker also announced a 20% cut to global output as consumers turn their backs on its lacklustre lineup, leaving its models to gather dust at dealerships. Renault, which owns 36% of Nissan, is open to Nissan pursuing a potential merger with Honda, as the discussions could insulate Renault from the crisis plaguing its partner.

A spokesperson for Nissan declined to comment. A representative for Foxconn wasn't immediately available. Honda executive VP Shinji Aoyama said the carmaker is considering options that may also involve a capital tie-up or a holding company under which the combined businesses would operate.