Honda, Nissan mull manufacturing partnership: Report

Amid reports of potential merger between Honda Motor Co. and Nissan Motor Co., Japan’s two automakers are mulling a partnership in manufacturing in which they will build vehicles in one another's factories as part of their plan to deepen ties, a report by news agency Kyodo said on Saturday.

The two “car manufacturers are expected to announce Monday that they are beginning talks on a merger that would create the world's third-biggest automaker group by volume,” the report said citing sources.

A merger of Japan's second largest car company Honda and third largest Nissan would create the world's third largest auto group by vehicle sales, behind Toyota and Volkswagen, making 7.4 million vehicles per year.

Honda will consider supplying hybrid vehicles to Nissan as part of the manufacturing partnership, the report said.

In March this year, the two car companies had forged a strategic partnership to cooperate in electric vehicle development.

According to a report by news agency Reuters, a Honda spokesperson said as announced Honda, "Nissan and Mitsubishi Motors are in the process of bringing together our strengths and exploring potential forms of cooperation, but nothing has been decided yet".

Nissan is the top shareholder in Mitsubishi Motors.

Honda could use Nissan's car factory in Britain, as it now only has factories for engines and motorcycles in Europe, said the Kyodo report.

The two “automakers, meanwhile, will study the possibility of producing hybrid vehicles for sale in North America where there is solid demand for gasoline-electric vehicles,” it also said.

Nissan Motor pursuing a deal with Honda Motor Co. indicates the former is in “panic mode,” according to Carlos Ghosn, the ex-chairman of the Japanese automaker.

“It’s a desperate move,” Ghosn told Bloomberg Television on Friday.

“It’s not a pragmatic deal because frankly, the synergies between the two companies are difficult to find,” he added.