TOKYO – Nissan has withdrawn from its memorandum of understanding with Honda regarding a proposed merger under a joint holding company, Japan’s Nikkei business daily reported on Feb. 5. The move comes after months of negotiations aimed at forming a global powerhouse in the automotive industry, only to collapse over disagreements on control and governance.
The two Japanese automakers had initially announced plans in December 2023 to explore a merger, with a goal of finalizing an agreement by June 2024 and establishing a holding company by August 2026. However, discussions stalled when Honda proposed taking a direct stake in Nissan, effectively making it a subsidiary rather than an equal partner, according to Nikkei.
Nissan, still working through financial restructuring efforts, resisted the idea of becoming a junior partner. The company reportedly insisted on an integration that preserved its independence, leading to the breakdown in negotiations.
Merger Plans Stalled as Nissan Pushes Back on Honda’s Proposal
According to reports, Honda had laid out conditions for the merger, including Nissan making significant progress in its ongoing restructuring efforts. With those efforts progressing slowly, Honda’s leadership pushed for greater control in a potential tie-up. Under the original framework, Honda was expected to nominate the majority of board members for the holding company, as well as appoint its CEO.
Nissan’s reluctance to accept these terms ultimately led to its decision to pull out of discussions. The company’s board was reportedly meeting on Feb. 5 to formally review the situation. A Nissan spokesperson stated that talks were still ongoing, with an official update expected by mid-February.
“Honda and Nissan are currently in the process of discussing various matters, including the facts reported in the media,” Honda said in a separate statement. The automakers previously said they aimed to finalize their direction by mid-February.
Mitsubishi Awaits Clarity
Mitsubishi Motors, which had been considering joining the alliance, is now taking a wait-and-see approach. CEO Takao Kato said on Feb. 4 that Mitsubishi is still evaluating its potential role in the partnership and will make a decision once more details emerge. The company had initially planned to decide by the end of January but has now pushed that timeline to mid-February.
“We do not have a full grasp of the details yet, so we will make a decision after hearing from them about the situation,” Kato said.
A Missed Opportunity for a Global Powerhouse
The proposed merger was set to create a mobility giant with combined revenues exceeding ¥30 trillion ($190 billion) and operating profits above ¥3 trillion ($19 billion). If Mitsubishi had joined, the new entity would have ranked as the world’s third-largest automotive group, surpassing Hyundai Motor Group and trailing only Toyota and Volkswagen Group.
The failed talks mark another turbulent chapter for Nissan, which has struggled with leadership instability and financial challenges since the 2018 ousting of former chairman Carlos Ghosn. Meanwhile, Honda has maintained relative stability under CEO Toshihiro Mibe, who took the helm in 2021.
With the merger off the table for now, Nissan and Honda will explore other potential areas of collaboration, including electric vehicles and mobility technologies. However, whether those discussions gain traction remains to be seen.
What’s Next?
As both companies reassess their future strategies, investors and industry analysts will be closely watching for any potential revival of merger talks or alternative collaboration efforts. For now, Nissan’s decision to walk away underscores the continued challenges facing the Japanese auto industry as it seeks to navigate a rapidly evolving global market.