Honda-Nissan Merger Officially Called Off

A proposed deal which would’ve seen Honda and Nissan merge to create one of the largest companies in the automotive industry has collapsed, both manufacturers have confirmed.

Over the last few months, the two have been discussing a deal with an initial proposal that would’ve seen them create a joint holding company. The two companies signed a memorandum of understanding on 23 December last year, agreeing to look into merging operations, strengthening an agreement made earlier in 2024 to collaborate on electric cars. However, reports of those talks ending emerged last week over a disagreement over the structure of the deal.

That has now been confirmed by both companies. In Nissan’s statement, it says that Honda proposed a change in the deal from creating a joint holding company with it appointing the majority of directors, ‘to a structure where Honda would be the parent company and Nissan the subsidiary through a share exchange.’

This is not a deal Nissan would ultimately agree to. Its statement said: “As a result of these discussions, both companies concluded that, to prioritise speed of decision-making and execution of management measures in an increasingly volatile market environment heading into the era of electrification, it would be most appropriate to cease discussions and terminate the [memorandum of understanding].”

It has however stated the two companies will continue to collaborate in future as part of a ‘strategic partnership aimed at the era of intelligence and electrified vehicles.’

Honda’s briefer statement didn’t dive into any further details over talks ending, only emphasising Nissan’s point on future collaboration.

Though exact details have not been officially confirmed, it was reported last week by the Financial Times that Honda had unexpectedly proposed the wholesale takeover due to its higher market valuation. FT says the company is valued at around £31bn, compared with Nissan at around £8bn. 

It further reported that Nissan’s reconsideration had been spurred on by Renault, which owns a 36 per cent stake in Nissan. The French manufacturer reportedly urged Nissan to seek better terms following Honda's proposal.

Part of the reason for the proposed merger was declining sales for both manufacturers throughout 2024, particularly Nissan, which experienced a sharp drop in profit last year. Increasing competition from Chinese brands, particularly in the EV market, was largely behind the original tie-up on EVs.