Negotiations between Honda and Nissan are set to start this week with a 2026 merger goal

According to Japanese media, which cited unnamed sources, Honda Motor Co. and Nissan Motor Co. are hoping to finalize a merger agreement as soon as June once talks start later Monday. They may merge in 2026.

According to Japanese broadcaster NHK, the two manufacturers intend to establish a holding company led by a president chosen by Honda. Following the companies' board meetings on Monday afternoon, a press briefing is anticipated.

In an apparent attempt to alert authorities to their intentions to formally begin merger negotiations, the presidents of Honda, Nissan, and Mitsubishi Motor Corp., Nissan's junior partner, were observed arriving at and departing Japan's transportation ministry on Monday morning.

As they were departing, the executives did not answer questions, and representatives for Honda and Nissan also declined to comment.

According to a different Yomiuri source, the goal is to merge in 2026 and make the holding company the listed entity. Nissan's stock fell as much as 2.6%, extending the year-to-date declines to over 21%. Honda's stock was up 2.1% at the time. It has decreased 14.4% since January.

Both Honda and Nissan are dealing with serious issues; the latter is in severe financial distress as a flood of electric and hybrid cars from Chinese rivals compels established companies to combine their resources.

Nissan needs a turnaround more than ever because of its declining sales in China and the US, which have compelled it to reduce manufacturing capacity, lay off employees, and drop its annual profit forecast by 70%.

Taiwanese company Hon Hai Precision Industry Co. reportedly expressed interest in purchasing Nissan, which originally hindered negotiations. However, according to a person familiar with the situation last week, Foxconn, the company that makes iPhones, is temporarily halting its pursuit to observe how negotiations between the two Japanese businesses progress.

A partnership between Honda, Nissan, and possibly Nissan's junior partner Mitsubishi Motors would essentially divide the Japanese auto industry in half, putting the three companies up against Toyota Motor Corp. and its alliances with Mazda, Subaru, and Suzuki.

Earlier this year, Honda and Nissan announced plans to co-develop batteries, software, and other EV technologies with Mitsubishi Motors, starting the process of establishing a technical collaboration.