What a Honda-Nissan merger could mean for the auto industry and consumers

Honda and Nissan are reportedly considering merging, sparking speculation about what the possible move could mean, but experts say rumors of a partnership are not a surprise.

News of the merger talks, which was first reported by the Nikkei newspaper on Tuesday, comes as both Japanese auto giants struggle to compete with the world’s biggest electric vehicle (EV) makers, including Tesla and Chinese automaker BYD.

Nissan and Honda are reportedly in talks for a possible merger. (Getty Images / Fake Images)

While neither Honda nor Nissan have confirmed merger talks, Brian Moody, executive editor of Autotrader and Kelley Blue Book, predicted about a year ago that there would be more of these types of partnerships, because the companies can pool resources and defray costs.

Moody told FOX Business in an interview that if a small brand says it’s going all-electric, that’s one thing, but for a large company to do it is a massive undertaking that requires massive amounts of research and development.

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Honda and Nissan are Japan’s second and third largest automakers, respectively, with Toyota leading both.

Rumors about a possible merger between Honda and Nissan are not a surprise (YOSHIKAZU TSUNO/AFP via Getty Images/Getty Images)

The respective market capitalizations of Honda and Nissan are approximately 5.95 trillion yen ($38.8 billion) and 1.17 trillion yen ($7.6 billion).

“A company like Honda may not be able to do that on its own, but at the same time, Honda has some pretty attractive products, so I feel like they both bring something important to the table,” Moody said.

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“But the most important thing is to pool resources so that they don’t make a bad business decision for a technology, electric cars, that is growing, but not as fast as people perhaps thought or expected,” he added.

One possible outcome of a possible Honda-Nissan merger could be a less expensive electric vehicle option, according to Brian Moody. (David Paul Morris/Bloomberg via Getty Images/Getty Images)

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

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

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