Nissan Motor Corp O the one hand users Honda Motor Co on the other hand did confirm on Wednesday that while they are in talks with each other on coming together there are no plans for merger as some reports were claiming. This comes at the backdrop of the fact that both the companies are struggling to keep up with the competitive dynamics of the automotive market that is quickly moving towards electric vehicles and further being contested by China’s suppliers.

Across the globe, Nissan’s shares increased almost 24% as there were reports of a probable merger that would have formed the third largest auto making conglomerate. Odds are that the stakes of Honda’s now fall or even increase by 3%, if they were to decline that is. Meanwhile the quotations of Nissan’s shares were stopped and altered after the corporations themselves detailed their point of view clarifying that, they were, ‘considering various possibilities of future cooperation but no contract has been signed yet’’ The boundaries of the two firms coming together were expanded.

Industry Context and Strategic Moves

Electric cars are fast gaining prominence and all automotive manufacturers are targeting to move all their offerings to it. As such, popular Chinese manufactures like BYD and Nio are seizing more market space, and Japanese companies are starting to reconsider their plans. As a part of this conglomeration, in August, Nissan, Honda and Mitsubishi Motors announced collaborative component sharing regarding EVs and software development for autonomous driving, suggesting a response to the industry dynamics.

Combining Nissan and Honda could lead to the creation of a company with a value of about 35 billion dollars, which will make it possible for Honda and Nissan Auto to withstand the pressure exerted by larger corporations like Toyota and Volkswagen. Most analysts agree that Honda would greatly benefit from the know-how of Nissan in the construction of batteries and electric cars, as well as in the development of modern hybrid technology.

Pressure in the Job Market and Expectations

Nissan’s recent performance has turned a few heads when it reported a quarterly loss of about 9.3 billion yen ($61 million) and intended on laying off roughly 9,000 employees, which is 6% of all the employees in the company. Their credit rating perspective also took a hit when Fitch Ratings revised it due to excessive market competition, resulting in the destruction of profit margins. As for Honda, he did not fare much better with a gross profit reduction of nearly 20% throughout the first half of their fiscal year due to a downturn in the sales market in China.

Considering both companies find themselves in the same competitive landscape as they both are facing similar issues, the need to work together has become greater, especially with plots in the market from Foxconn's side regarding the purchase of a stake in the company's EV wing. 

Conclusion

The agreements between Nissan and Honda regarding their collaboration have been made clearer but there is still much left to be solved. The automotive market is standing at a delicate intersection, how will these two companies deal with their issues could play a deciding factor as to how they compete within the market. As they begin to maneuver around the issues that they have, the goals that they set for themselves will include expanding their electric vehicle range, and refining their operational practices for electric powered vehicles enhancing their appeal to the better half of modern society.