Japan’s Nissan will end merger discussions with its competitor Honda, according to the Nikkei newspaper. This decision halts plans for a partnership that would have formed the world’s third-largest automaker, raising doubts about Nissan’s ability to achieve a successful turnaround on its own. In December, the two Japanese automakers had agreed to explore a potential merger, with the goal of launching a joint holding company as soon as 2026, which would also integrate smaller alliance partner Mitsubishi Motors under this structure.
The companies have pushed for a tie-up to cut costs and speed up vehicle development, as they face stiff competition in the global shift to electric vehicles from upstarts such as Tesla and Chinese firm BYD. However, the plan has become increasingly complicated due to lackluster consumer spending, a slumping global economy, and the risk of extra disruption from potential tariffs from U.S. President Donald Trump.
Differences between the two carmakers have also hampered the merger talks. A source familiar with the matter said that Honda’s board is reluctant to cede control to Nissan, which is more concerned about its recovery plan than boosting market share. The talks have been further delayed by reports that Honda wants to make Nissan a subsidiary, a move that Nissan opposes, the source added.
The two companies had planned to sign a memorandum of understanding on the deal by the end of January and finish their integration by mid-February. Still, that schedule has been pushed back as the companies struggle to find common ground. The tie-up would have made them the biggest automaker in Asia and the third largest worldwide, behind Toyota and Volkswagen Group. But it would have come when an EV price war launched by upstarts has already pushed down profits for many of the industry’s established players.
Shares in Nissan, which has a market value nearly five times that of Honda, slid more than 4% before the Tokyo Stock Exchange temporarily suspended trade following the report. Honda continued to trade and finished the day up more than 8%, in a sign of investor relief that the merger plans had been scrapped.
Nissan’s long-term alliance partner Renault has said it was open to the idea. The French automaker holds 36% of the Japanese firm, including 18.7% through a French trust. Mitsubishi Motors, which had been considering joining the merger talks, has signaled that it might not take part. The sources said the boards of both companies are expected to meet soon to decide what next steps to pursue.
