Japanese car manufacturers Nissan and Honda agreed to consider a merger and create a joint holding company, which would create the world’s third-largest automaker.

The two companies said in a statement Monday that they would seek combined sales of $191 billion and operating profit of more than $19 billion through the potential merger.

The companies expect to close negotiations around June 2025 and form a holding company in August 2026, when the shares of both companies will be delisted.

The merger talks come as both automakers struggle to compete with the world’s biggest electric vehicle makers, including Tesla and Chinese automaker BYD.

WHAT A HONDA-NISSAN MERGER COULD MEAN FOR THE AUTO INDUSTRY AND CONSUMERS

Makoto Uchida (left), director, executive representative, president and CEO of Nissan Motor Corporation and Toshihiro Mibe (right), director, president and executive representative of Honda, hold a joint press conference on their merger (Reuters / Reuters Photos)

The merger would create the third largest car group in the world vehicle sales, behind Toyota and Volkswagen.

Honda, Japan’s second-largest automaker after Toyota, has a market capitalization of more than $40 billion, while third-ranked Nissan is valued at about $10 billion.

“Today marks a pivotal moment as we begin discussions about the business integration that has the potential to shape our future,” Nissan chairman, chief executive officer and chief executive officer Makoto Uchida said in a statement. “If we realize that, I believe that by bringing together the strengths of both companies, we can offer unmatched value to customers around the world who appreciate our respective brands. Together, we can create a unique way for them to enjoy cars that neither companies could achieve on their own.”

The Honda-Nissan merger would create the world’s third-largest auto group by vehicle sales. (Reuters / Reuters Photos)

Toshihiro Mibe, director and chief executive of Honda, said: “Creating new mobility value by bringing together the resources including knowledge, talents and technologies that Honda and Nissan have been developing over the years is essential to overcome the challenging changes environmental that the automobile industry he faces

“Honda and Nissan are two companies with different strengths,” Mibe added. “We are still in the early stages of our review, and we have not yet decided on a business integration, but in order to find a direction for the possibility of business integration by the end of January 2025, we strive to be the only leading company that creates new mobility value through a chemical reaction that can only be driven by the synthesis of the two teams.”

HONDA, NISSAN ALLEGEDLY PLAN TO START MERGER TALK IN LIGHT OF EV COMPETITION: REPORT

Honda and Nissan also agreed to expand collaboration at Mitsubishi Motors. (Reuters / Reuters Photos)

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The majority of the board of the holding company will be named by Honda.

The companies have been exploring ways to strengthen their partnership, including saying in March that they were considering partnering on vehicle electrification and intelligence and announcing in August an agreement to conduct joint research on key technologies in the platform area for next generation software. defined vehicles.

They also agreed to extend the collaboration to Mitsubishi Motors.

Reuters contributed to this report.