In significant news for the automotive industry, Honda and Nissan have officially announced they are terminating their $60 billion merger plan. The two companies were in discussions for over a month, seeking to collaborate in a strategic move that was particularly critical for Nissan, which faced the risk of financial instability due to dwindling profits. This merger was expected to bolster the Japanese auto sector against increasing competition from electric car manufacturers in China. The merger discussions also involved Mitsubishi, but that initiative has also been abandoned.
Going forward, Nissan and Honda will pursue a “strategic partnership” focusing on the development of “intelligent and electrified vehicles.” According to a press release, the decision to terminate the merger was made after the CEOs evaluated the current market landscape, integration goals, and management strategies post-integration.
However, Reuters reported that negotiations fell apart mainly due to Honda’s unexpected suggestion to position Nissan as a subsidiary. Nissan aimed to maintain equality in the partnership, but given its recent performance—where earnings were down over 90 percent year over year in 2024 and a drastic cut in annual profit forecasts—its leverage was diminished. In contrast, Honda has shown resilience, with third-quarter profits reflecting a 5 percent increase year over year.
