The industry that helped turn Japan into an economic juggernaut is undergoing its biggest change in years, with two of the country’s best-known carmakers looking to join forces.

Honda Motor Co. and Nissan Motor Co. both saw global vehicle sales stagnate or fall in 2024, underscoring the need for the pair to combine and arrest their sliding market shares.

As talks between the automakers continue, analysts say a combination makes sense but may face hurdles, including short-term financial hardship.

Honda’s sales slipped 4.6% to 3.8 million units last year, as production dropped 11% to 3.7 million vehicles. Sales at smaller Japanese rival Nissan decreased 0.8% to 3.3 million for the 12 months, while output declined 8.7% to 3.1 million units.

Despite reports that Mitsubishi would not be a part of the Honda-Nissan merger, officially no decision has been made

As Honda and Nissan push forward with merger plans, Mitsubishi Motors may bow out, citing doubts about its influence in the new partnership.

Mitsubishi is thought to be concerned about its management freedom, as the future of Nissan’s management restructuring is not clear.

With Honda and Nissan likely to join forces soon, we used the power of AI to dream up some possible creations.

Tokyo, Nissan is slashing production at its US plants and offering buyouts to factory workers there as part of the Japanese automaker's urgent efforts to return to profitability.

So, on a more short-term basis, and to make sure its EVs are American-built and affordable, Honda could continue partnering up with GM's now profitable Ultium EV platform and dish out another electric vehicle built as a joint venture,