Honda and Nissan consider mutual production of vehicles, Kyodo reports

Honda 7267 and Nissan 7201 are considering producing vehicles in one another's factories as part of their plan to deepen ties, news agency Kyodo reported on Saturday without citing sources.

The report added that Honda will also consider supplying hybrid vehicles to Nissan as part of the plan that may lead to a potential merger, without mentioning the source of the information.

A merger of Honda, Japan's second-largest car company, and Nissan, its third-largest, could create the world's third-largest auto group by vehicle sales behind Toyota 7203 and Volkswagen VOW, with an annual output of 7.4 million vehicles.

"As announced in March and August, our company, Nissan and Mitsubishi Motors are in the process of bringing together our strengths and exploring potential forms of cooperation, but nothing has been decided yet," a Honda spokesperson told Reuters on Saturday.

Nissan did not immediately respond to a request for comment. The company is the top shareholder in Mitsubishi Motors 7211.

The Kyodo report said Honda could utilise Nissan's car factory in the United Kingdom, given it currently only has factories for engines and motorcycles in Europe.

The move comes amid concerns over how president-elect Donald Trump's policies may shake up manufacturing, the report added.

The two automakers forged a strategic partnership in March to cooperate in electric vehicle development, but Nissan has faced financial and strategic troubles in recent months.