TOKYO: Honda and Nissan have scrapped their merger talks, ending what could have been a game-changing partnership in the global auto industry. The two Japanese carmakers confirmed on Thursday that they had abandoned their plans to form the world’s third-largest automaker, a move initially aimed at strengthening their position in the electric vehicle market against Tesla and rising Chinese competitors.
The companies signed a memorandum of understanding (MoU) in December, but discussions collapsed after Honda proposed making Nissan a subsidiary instead of merging under a new holding company. Nissan rejected this, fearing a loss of autonomy and uncertainty over its future growth.
Honda’s CEO Toshihiro Mibe expressed disappointment, stating that decision-making under a joint board could slow down responses to industry challenges. Nissan’s CEO Makoto Uchida acknowledged the company’s financial struggles but insisted on maintaining independence, saying the merger terms did not align with Nissan’s long-term vision.
Despite calling off the merger, the companies will continue their strategic partnership with Mitsubishi Motors, collaborating on electric and intelligent vehicle technologies. Meanwhile, Nissan’s financial woes continue, with the company now projecting an annual loss of $520 million due to declining sales. Honda, on the other hand, reported a 7.4% profit decline, mainly due to weak performance in China.
Renault, which owns a 35% stake in Nissan, welcomed Nissan’s renewed focus on its turnaround strategy. Speculation is growing around Foxconn’s interest in acquiring Renault’s stake, positioning itself in the evolving automotive landscape.
Industry analysts suggest both Honda and Nissan may need new partnerships to stay competitive in the electric and autonomous vehicle market.
