Honda, Nissan scrap merger plan as negotiations collapse

Honda Motor Co. and Nissan Motor Co. said Thursday they have scrapped a historic realignment plan to merge into what would have become the world’s third-biggest auto group by volume, as negotiations collapsed less than two months after its announcement.

But Honda and Nissan, Japan’s second- and third-largest automakers, will continue their strategic partnership in electric vehicles and other fields along with Mitsubishi Motors Corp., Nissan’s alliance partner, they said.

The failure of the tie-up plan, intended to keep the companies competitive in the global market, will force them to reassess their survival strategies and is expected to influence the auto industry’s realignment.

File photo shows Nissan Motor Co. President Makoto Uchida (L) and Honda Motor Co. President Toshihiro Mibe attending a joint press conference in Tokyo in December 2024. (Kyodo)

Honda and Nissan said in December they aimed to finalize negotiations by June 2025 and establish a holding company in 2026 under which both would operate. Mitsubishi had also considered joining the framework.

However, after considering “various options,” including Honda’s proposal to make Nissan its subsidiary, they decided to end the talks to “prioritize speed of decision-making and execution of management measures” in an increasingly volatile market heading into electrification, they said in a statement.

The two carmakers aimed to cut costs by sharing the growing financial burden of developing EVs and software to better compete with global rivals like U.S.-based Tesla Inc. and China’s BYD Co.

When they revealed their plan to begin merger talks at a press conference in December, Honda said struggling Nissan would need to boost its turnaround efforts as a condition for the deal.

In November, Nissan said it would cut 9,000 jobs worldwide and reduce its global production capacity by 20 percent.

But Nissan’s plans failed to convince Honda that the slumping carmaker is on track for a successful turnaround, sources familiar with the matter have said.

Fearing that slow progress in Nissan’s revamp could jeopardize the merger’s future, Honda sought to become its parent, but the move riled Nissan’s board and pushed it toward scrapping the plan, according to sources.

Honda and Nissan initially said they would unveil the details of their tie-up plan by the end of January but pushed it back to mid-February.

Analysts expect Taiwanese electronics giant Foxconn, formally Hon Hai Precision Industry Co., to intensify efforts to acquire a stake in Nissan, given its recent entry into the EV market and past talks with Renault SA about purchasing some of the French automaker’s shares in Nissan.

On Wednesday, Hon Hai Chairman Young Liu told reporters in Taiwan that the company’s aim is “cooperation” with Nissan, not acquisition.

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