Nissan and Honda are in talks about merging the two automakers

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Nissan and Honda are in exploratory talks about a merger of the two automakers that would create a Japanese giant worth $52 billion, according to two people familiar with the matter.

The two companies are considering a way to merge that would help them better compete at a time when traditional automakers are competing with fast-growing Chinese electric car manufacturers, and consumer demand for electric cars is slower than expected.

Talks between Nissan and Honda are still at an early stage, and there are concerns about a potential political backlash in Japan because a merger of two of the country’s most popular car brands could lead to significant job cuts, a person familiar with the matter said. Discussions said.

This year, shares of Nissan, which has a cross-shareholding structure with French company Renault, fell by 40 percent.

The Japanese company had been searching for a lead investor for several months, and the Financial Times reported last November that “all options” were being considered, including a merger with Honda. Nissan and Honda already have a partnership to develop and sell electric vehicles.

The Nikkei newspaper was the first to report news of the talks between Nissan and Honda. “The content of the Nikkei report is not something announced by either company,” Nissan said.

He added: “As announced in March this year, Honda and Nissan are exploring various possibilities for future cooperation, leveraging each other’s strengths. If there are any updates, we will inform our stakeholders in a timely manner.”

Honda did not immediately respond to a request for comment. Renault declined to comment.

This is a developing story.