Nissan and Honda’s negotiations to form the world’s third-largest automaker by sales have raised concerns among investors, as the companies navigate industry challenges, including competition from China’s BYD and looming US trade tariffs.
The Japanese automakers announced in December that they were exploring a potential merger to strengthen their market position amid growing pressure from electric vehicle (EV) entrants. However, the talks coincide with uncertainty over tariffs proposed by US President Donald Trump, which could disrupt their supply chains.
“Nissan’s future and turnaround may become a concern for investors,” said Vincent Sun, an analyst at Morningstar. He added that Nissan faces higher exposure to potential US-Mexico tariffs compared to Honda and Toyota, adding another layer of risk to the deal.
A merger between Nissan and Honda would position them behind Toyota and Volkswagen in the global auto market, allowing them to pool resources to compete more effectively in the evolving EV landscape. However, with geopolitical and economic pressures mounting, the path to consolidation remains uncertain.
