Japanese automakers Honda and Nissan have officially ended merger talks that were announced in December, bringing an abrupt halt to a deal that could have made them the world’s third-largest car manufacturer.
In a joint statement on Thursday, the two companies confirmed they had agreed to cancel the Memorandum of Understanding (MOU) signed on December 23, 2024. The proposed merger was initially seen as a strategy to compete with electric vehicle (EV) giants such as Tesla and Chinese automakers.
The decision to call off the merger came after Honda proposed a different structure from the one initially agreed upon. Reports indicate that Honda suggested making Nissan a subsidiary instead of integrating both companies under a new holding firm. This change reportedly caused tensions between the two automakers.
Honda and Nissan acknowledged in their statement that Honda had proposed "a structure where Honda would be the parent company and Nissan the subsidiary through a share exchange." However, after further discussions, they decided it was best to end talks.
They cited the need for "speed in decision-making and execution of management measures in an increasingly volatile market environment" as the primary reason for terminating the merger plans. Despite this, both companies emphasized that they will continue working together in a strategic partnership to develop intelligent and electrified vehicles.
The companies assured investors that the cancellation of the merger will not affect their financial performance.
In a separate report, Honda announced a net profit of 805.3 billion yen ($5.2 billion) for the nine months ending in December 2024. However, this marked a 7.4 percent decline compared to the previous year, primarily due to a drop in sales in China. Despite this setback, Honda's overall sales grew by 8.9 percent, reaching 16.3 trillion yen.
The automaker slightly adjusted its revenue forecast for the full financial year ending in March, increasing it from 21.0 trillion yen to 21.6 trillion yen. However, it maintained its operating profit and net profit projections at 1.42 trillion yen and 950 billion yen, respectively.
While the merger talks have ended, both companies remain focused on advancing their electric and smart vehicle technology to stay competitive in the evolving automotive industry.
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