5-2-2025 (TOKYO) Nissan Motor Co. is reportedly considering abandoning merger discussions with Honda Motor Co., according to sources close to the negotiations. The potential dissolution of talks comes as Nissan’s board prepares to convene for a crucial decision on the company’s strategic direction.
The prospective merger, which would have created the world’s third-largest automotive powerhouse, now appears increasingly unlikely as fundamental disagreements emerge between the two Japanese giants. Market reaction to reports of the talks’ potential termination was notably positive, with Honda’s shares climbing more than 2% and Nissan experiencing a 1.6% uptick, contrasting with the Nikkei 225’s marginal decline.
Industry insiders, speaking on condition of anonymity, reveal that Honda’s suggestion for Nissan to become a subsidiary has emerged as a significant stumbling block. This proposal markedly deviates from the initial vision of an equal partnership, sources indicate. The substantial disparity in market capitalisation between the two firms—Honda’s value being nearly quintuple that of Nissan—has complicated negotiations further.
The merger discussions, which began last year, were initially viewed as a strategic response to mounting pressures from Chinese electric vehicle manufacturers, particularly BYD, and other emerging competitors in the rapidly evolving automotive sector. However, Honda has reportedly expressed growing concerns about Nissan’s ongoing recovery efforts, casting doubt on the viability of the partnership.
Both manufacturers have indicated they will make a formal announcement in mid-February, maintaining their official silence on the current status of negotiations. The potential collapse of the merger talks raises fresh questions about Nissan’s future trajectory, particularly given its challenging recovery from the 2018 Carlos Ghosn scandal and its struggles to adapt to the electric vehicle revolution.
Renault, Nissan’s long-standing alliance partner holding a 36% stake, had previously signalled its openness to the Honda merger. However, the latest developments suggest that Nissan may need to explore alternative strategies to maintain its competitive edge in an increasingly challenging global automotive market.
