What does the Honda-Nissan merger mean for the auto industry and consumers?

Honda and Nissan are said to be looking Possibility of mergingThis has sparked speculation about what this potential move could mean – but experts say the partnership rumors are not a surprise.

News of the merger talks, first reported by the Nikkei newspaper on Tuesday, comes as the two Japanese auto giants struggle to compete with the world’s largest electric vehicle makers. Including Tesla And the Chinese automaker BYD.

While neither Honda or Nissan have confirmed merger discussions, Brian Moody, executive editor at AutoTrader and Kelley Blue Book, predicted about a year ago that there would be more of these types of partnerships, as the companies are able to pool resources and defray the costs.

Modi said Fox Business In an interview, if a small brand says they will go all-electric, that’s one thing, but for a large company to do so is a huge undertaking that requires a huge amount of research and development.

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Honda and Nissan are the second and third largest automobile manufacturers in Japan, respectively, led by Toyota.

The market capitalization of Honda and Nissan is approximately 5.95 trillion yen ($38.8 billion) and 1.17 trillion yen ($7.6 billion).

“a company Like Honda “They may not be able to do it alone, but at the same time, Honda has some very attractive products, so I feel like they both bring something important to the table,” Moody said.

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“But the important thing is to pool resources so they don’t make a bad business decision about the technology, electric cars, which is growing — but not growing as quickly as people might have thought or hoped,” he added.

So what could the merger mean for the consumer? Moody says he could see the value in smaller, less expensive electric cars coming from such a deal.

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“I could even see a merger or partnership like this leading to a lower-cost sub-brand,” he said. “Because that’s what we’re hearing, is that a lot of people, a lot of consumers, are saying, ‘You know, new cars are too expensive. I can’t afford a new car.’

FOX Business’ Andrea Margolis and Reuters contributed to this report.