Investing.com– Shares of Nissan) and Mitsubishi Motors)rose sharply on Wednesday after media reports said Honda and Nissan (OTC:) were considering a three-way merger in the face of increased competition from China and electric vehicles.
Nissan Motor Co., Ltd. (TYO:) rallied as much as 20% in Tokyo trade to 417.6 yen, while Mitsubishi Motors (OTC:) Corp . (TYO:) surged as high as 474.7 yen. Honda Motor Co Ltd (TYO:) (NYSE:) lagged, falling about 2% to 1,240.0 yen.
Toyota Motor (NYSE:) (TYO:)- who will likely be subject to heightened competition in the event of a merger- rose 1.8%, while Japan’s benchmark index fell 0.7%.
The Nikkei Asia daily reported on Tuesday that Nissan and Honda were considering a merger, and could potentially draw in Mitsubishi, as the automaking giants seek consolidation to weather heightened competition.
Honda and Nissan will reportedly set up a holding company before setting merger terms, and will also potentially add Mitsubishi to the deal.
The two have already increased cooperation in recent years, pooling their resources as they face increased competition from Chinese EV makers, as well as Tesla Inc (NASDAQ:). Dwindling sales in China have been a major point of contention, given that the country is the world’s biggest automobile market.
The Japanese automakers are also grappling with sluggish demand in the U.S. and Europe, both key automobile markets.
Both Honda and Nissan- Japan’s second and third-largest automakers, respectively, issued identical statements that no merger agreement had been announced, Reuters reported.
