Honda Motor Co. Ltd. and Nissan Motor Corporation announced on Thursday that they have abandoned a historic plan to merge, which would have created the world’s third-largest automaker by volume, as negotiations collapsed less than two months after the proposal was made.
However, Honda and Nissan, Japan’s second- and third-largest automakers, will maintain their strategic partnership, focusing on software development and other areas, alongside Mitsubishi Motors Corporation, Nissan’s alliance partner.
The two carmakers said in December they aimed to finish negotiations by June 2025 and set up a holding company in 2026 under which both brands would operate.
They had planned to reduce costs by sharing the growing financial burden of developing electric vehicles and software to better compete with global rivals like U.S.-based Tesla Inc. and China’s BYD Co.
When they announced merger talks at a press conference in December, Honda said struggling Nissan would need to strengthen its turnaround efforts as a condition for the deal.
In November, Nissan revealed plans to cut 9,000 jobs globally and reduce its production capacity by 20%.
However, sources familiar with the matter said Nissan’s plans did not convince Honda that the company was on track for a successful turnaround.
Honda recently proposed making Nissan a subsidiary, concerned that slow progress in the automaker’s restructuring could threaten the merger’s future. However, the move angered Nissan’s board and led it to lean toward abandoning the plan, sources said.
While Honda and Nissan initially aimed to unveil the details of their tie-up by the end of January, they postponed the announcement until mid-February.
Despite scrapping the merger, the companies emphasized that their ongoing strategic partnership with Mitsubishi Motors Corporation remains unaffected.