Nikkei: American Nissan plant will start assembling Honda cars
Photo: EPA

Nissan Motor has begun negotiations with Honda to supply cars in the United States, considering the possibility of using its underutilized American production facilities to produce large Honda models. This was reported by to by Nikkei Asia.

The talks come as Japanese automakers look for ways to increase local production in the U.S. due to disagreements in trade talks between Japan and the U.S. and concerns about the potential impact of tariffs.

According to the newspaper, Nissan is studying the possibility of producing pickup trucks for Honda at its plant in Canton, Mississippi.

This plant, one of Nissan's two automotive plants in the United States, now specializes in models such as the Frontier, a midsize pickup truck designed for commercial use.

According to the agreement under discussion, Nissan will produce trucks under the Honda brand, and Honda will sell them under its own brand in the United States.

Pickup trucks – light vehicles with an open cargo area behind the driver's seat – account for 20% of new car sales in the U.S. market.

In the US, Honda offers only compact pickups. The partnership with Nissan could help the company attract customers interested in full-size pickups.

The agreement provides significant benefits to both parties. The U.S. duties are expected to affect Honda's operating profit by approximately 650 billion yen ($4.42 billion) for the fiscal year ending March 2026, while Nissan could face losses of up to 450 billion yen ($3.06 billion) .

Japanese automakers are highly dependent on exports to the United States: 47% of Nissan's and 32% of Honda's sales in the US come from vehicles manufactured outside the country. Local production is becoming increasingly important to reduce tariff risks.

Honda has five plants in the US, but it will take time to ramp up local production. The supply agreement with Nissan will allow Honda to quickly ramp up production of competitive models in the United States without significant development investments.

Earlier, Honda decided to produce the next-generation Civic hybrid car in the US state of Indiana, rather than in Mexico, to avoid potential duties on one of its best-selling models.

Nissan struggles with under-utilization of capacity at its plants worldwide as sales remain sluggish.

According to research firm MarkLines, in 2024, the company's Canton plant will be operating at only 57% of capacity. This is well below the 80% that is usually considered the break-even point. The production of Honda vehicles will help increase plant utilization, which could potentially increase Nissan's net profit.

The Trump administration is taking a tough stance on trade negotiations, saying it will impose "reciprocal" tariffs on August 1, at virtually the same rates as those announced in April against Japan and other countries.

Deep disagreements remain between Japan and the United States over auto tariffs. Japanese companies' promises to increase production in the US could be a decisive factor in future negotiations.

  • Earlier, the two Japanese automakers discussed a potential merger that could have created the world's third-largest automotive group. However, those talks broke down after Nissan rejected Honda's offer to become its subsidiary.
  • Concerns about the impact of U.S. tariffs have prompted the CEOs to meet regularly since April. Although Honda and Nissan have ruled out the possibility of resuming merger talks.