Honda and Nissan officials were unable to reach an agreement to merger, ending talks that would have created one of the world’s largest automakers.
In a joint statement released by Nissan, Honda and Mitsubishi Motors, the three companies “agreed to terminate their (memorandum of understanding)…signed on December 23 last year regarding the consideration of a business integration between Nissan and Honda.”
Officials from the three companies announced in December 2024 they would hold talks to set up a joint holding company. The companies had set a timeline to finalize 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.
Reason Deal Collapsed
The merger of Honda, Japan’s second-largest automaker, with Nissan, its No. 3, would have been be the biggest auto deal since Fiat Chrysler Automobiles and PSA $52-billion merger in 2021 that formed Stellantis. The two Japanese companies would aim for combined sales of $191 billion. If the three companies had come to an agreement, it would have taken the global sales to more than eight million cars.
A stumbling block was Nissan reportedly baulking 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.
In a separate joint statement from those two companies, they noted the structure of the deal was indeed an issue as they stated “Honda proposed changing the structure from establishing a joint holding company, where Honda would appoint the majority of directors and the chief executive officer based on a joint share transfer as initially outlined in the MOU, to a structure where Honda would be the parent company and Nissan the subsidiary through a share exchange. As a result of these discussions, both companies concluded that…it would be most appropriate to cease discussions and terminate the MOU.”
The Road Ahead
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.
The three companies noted they will continue to “collaborate within the framework of a strategic partnership aimed at the era of intelligence and electrified vehicles. This framework was established with the MOU signed on August 1 last year, striving to create new value and maximize the corporate value of each company.”
Foxconn has reportedly 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,” stated Foxconn’s chairman Young Liu.
