Talks for a multi-billion-dollar merger between Japanese car giants Honda and Nissan have collapsed, formally ending the negotiations for the deal that would have led to the formation of one of the world’s biggest carmakers.
The tie-up between the two carmakers would have created an auto group worth $60bn that would have helped both Japanese companies compete against the Chinese and US rival brands, such as BYD and Tesla, upending the car industry.
As the deal talks ended on Thursday, Honda and Nissan said they will continue their partnership on the in-house development of batteries, software and electric vehicle technology along with Mitsubishi.
"Going forward, the three companies will collaborate within the framework of a strategic partnership aimed at the era of intelligence and electrified vehicles," the three said in a statement.
Honda Motor Co and Nissan Motor Corp announced in December they would hold talks to set up a joint holding company. The merger would have created the world's third-largest auto group by vehicle sales, only after Toyota and Volkswagen.
Mitsubishi Motors Corp then said it was considering joining that group.
Honda and Nissan initially said they were trying to finalise an agreement by June 2025 and set up the holding company by August that year. However, the media reports widely reported that cracks were emerging in a potential deal.
The negotiations between Japan’s third largest automaker, Nissan, and its larger rival, Honda, were complicated by growing differences between the two, sources previously told Reuters.
It was reported that Nissan baulked at the idea of becoming a junior player in the partnership with Honda which has a better financial position and was tipped to take the lead in the joint executive team.
For Nissan, the talks came amid ongoing financial trouble. Nissan reported loss in sales for the July-September quarter as its vehicle sales sank and it stunned investors in November when it decided to cut profit forecast by 70 per cent.
It announced slashing 9,000 jobs, one-fifth of global capacity in a turnaround plan for dwindling sales.
At that time, chief executive Makoto Uchida promised to forfeit 50 per cent of pay to take responsibility for the results and said he was focused on making business leaner but resilient.
The talks over a potential merger followed a collaboration earlier last year that saw Honda and Nissan agree to jointly develop EV technology, including software systems and battery platforms.
Nissan, whose fleet of electric vehicles includes the Leaf, has struggled to maintain its early momentum in the EV market. Honda has committed to making all its sales electric or hydrogen-powered by 2040 but has faced challenges scaling up its operations.
Taiwan’s Foxconn has now emerged as a new partner for Nissan as its chair said he is considering taking a stake in the company.
"If cooperation requires it (purchasing Nissan shares), we will consider it," Foxconn’s chairman Young Liu told reporters on Wednesday.
