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Japan’s Nissan and Honda announced on Thursday that their boards had voted to end merger talks, halting discussions on what would have been a $60 billion auto industry shake-up. However, the companies reaffirmed their commitment to collaborating on electric vehicle (EV) technology amid intensifying competition from Chinese automakers.
A merger would have created the world’s fourth-largest carmaker by vehicle sales, trailing only Toyota, Volkswagen, and Hyundai. But sources said negotiations stalled over strategic differences, including Honda’s proposal that Nissan become a subsidiary.
The two automakers, along with junior partner Mitsubishi Motors, had revealed their consideration of a merger late last year, though Mitsubishi was expected to opt out. In a joint statement, the companies said they would instead pursue a “strategic partnership aimed at the era of intelligence and electrified vehicles.”
Both Nissan and Honda have struggled to keep pace with the rapid rise of Chinese EV giants like BYD while also facing potential tariffs in the US market. Nissan has been undergoing a major restructuring since November, which includes plans to cut 9,000 jobs and reduce global production capacity by 20%. It has already suspended operations at its Changzhou plant in China as part of its downsizing efforts.
Despite calling off the merger, Nissan remains open to new alliances. Sources indicate the company is considering a partnership with Taiwan’s Foxconn, which has expressed interest in taking a stake in Nissan.
The merger speculation had initially boosted Nissan and Honda’s stock prices, with shares soaring 60% and 26% respectively in December. However, those gains have since dwindled to 21% for Nissan and 11% for Honda.
Nissan, which has struggled to recover from the fallout of former chairman Carlos Ghosn’s arrest in 2018, now has a market capitalisation nearly five times smaller than Honda’s. While both companies were worth around 4.6 trillion yen a decade ago, Honda now stands at approximately 7.5 trillion yen ($48.6 billion).
Faridah Abdulkadiri
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