Nissan will suspend merger talks with Honda, according to a new report from Japan’s Nikkei Business Daily. The company will reportedly withdraw from a memorandum of understanding the pair signed in December, which could have seen them merge by August 2026.
The Wall Street Journal reports, “Nissan’s board has determined that Honda’s terms for a combination of the two automakers are unacceptable,” citing “people familiar with the matter.”
In a statement, Nissan clarified that it has not made any formal announcement but said, “We plan to establish a direction and make an announcement around mid-February.”
Nissan Won’t Be a Subsidiary
Negotiations are breaking down over the structure of the proposed company, reports say.
The New York Times explains, “Before their disclosure in late December that they were exploring combining operations, Nissan and Honda had discussed operating as partners under a holding company.” However, in recent discussions, “Honda pushed for a structure that would give it a bigger say in the holding company and proposed that Nissan become its subsidiary — a plan that Nissan rejected.”
Some Cooperation Still Possible
The move, if true, wouldn’t necessarily mean no partnership between the two automakers. In a statement, Nissan noted that the two are still “in the stage of advancing various discussions.”
Nissan has faced a dramatic global sales drop and, according to some executives, has about a year to right itself before it would need to entertain takeover offers.
Honda is in a better financial position but beat Nissan’s sales results by less than 11% globally in 2024. At a roundtable discussion last month, Honda executives told Kelley Blue Book they sought the partnership to spread the immense development costs of electric vehicles, self-driving technology, and AI-powered virtual assistants.
Without a full merger, the two could still share costs and co-develop systems. However, the combined company would have become the world’s third-largest automaker, positioning itself to better compete with surging Chinese automakers.
BYD, China’s largest automaker, has overtaken Honda’s global sales and is on a growth trajectory no other automaker can match today.
In early trading, investors were reacting positively to the reported breakdown of talks. CNBC reports, “Shares of Nissan rose as much as 7.4%, while Honda climbed as high as 4.2%” this morning.
