The proposed $60 billion merger between Honda and Nissan, which would have created one of the world’s largest automakers, has officially been terminated. The talks, which also involved Mitsubishi Motors as a potential partner, collapsed due to irreconcilable differences, particularly over the balance of power and strategic direction. Honda and Nissan announced merger discussions in December 2024, aiming to create the world’s third-largest automaker by sales, with combined annual sales of over 8 million vehicles. The talks were based on synergy in the areas on electric vehicle (EV) technology, driven by the need to compete with Chinese EV makers like BYD and Tesla as well as global rivals like Toyota and Volkswagen
The merger was initially framed as a “merger of equals,” with plans to establish a joint holding company by August 2025. Honda has a market capitalization significantly larger than Nissan’s and was expected to take the lead in the executive team. According to media reports, Honda proposed making Nissan a fully owned subsidiary, deviating from the original plan. This change was driven by Honda’s concerns over Nissan’s slow turnaround progress and financial struggles, including significant plunge in first-half net profit and plans to cut thousands of jobs and around 20% of global capacity.
On February 13, 2025, Honda and Nissan formally announced the end of merger talks. The decision was attributed to Nissan’s resistance to becoming a subsidiary and Honda’s abrupt change in terms.Despite the merger’s failure, both companies, along with Mitsubishi, agreed to continue their strategic partnership on EV technology, including in-house development of batteries, software, and EV platforms, under a MoU framework.
Honda managers criticized Nissan’s slow decision-making and insufficient reduction in factory capacity. Nissan, in turn, resisted Honda’s pressure for deeper cuts, particularly regarding factories it deemed critical to its EV strategy. Honda’s abrupt change to the deal’s structure reflected its impatience with the pace of negotiations, further exacerbating tensions. Both companies faced challenges from Chinese EV makers like BYD, which surpassed Nissan and Honda in global sales in 2024, and potential U.S. tariffs on vehicles made in Mexico, a significant market for Nissan. Nissan’s alliance partner, Renault, labeled Honda’s strategy as “near-hostile” and criticized the lack of fair value for Nissan stakeholders, adding complexity to the negotiations. Honda’s CEO, Toshihiro Mibe, expressed disappointment but highlighted concerns over prolonged talks without progress, noting the potential “quick pain” of merging versus the risks of delay (source: Reuters, February 13, 2025).
The failed merger leaves Nissan in a precarious position, with ongoing financial challenges and the need for a new partner to reverse its fortunes. Nissan is now open to working with new partners, with Taiwan’s Foxconn seen as a potential candidate. Nissan has accelerated its turnaround program, planning to close a plant in Thailand by June 2025 and two additional plants thereafter. It also aims to further reduce capacity in China, where it operates eight factories. The company faces increased vulnerability to U.S.-Mexico tariffs, which could impact over a quarter of its U.S. sales
Honda, while financially stronger, missed an opportunity to bolster its global position through the merger. However, it remains confident and is exploring potential tie-ups with companies other than Nissan and Mitsubishi. The failure highlights Honda’s challenges in finding a suitable partner to address the competitive pressures from Chinese EV makers and the transition to electrification.
The collapse underscores the difficulties legacy automakers face in consolidating to compete with emerging EV leaders. It also highlights the complexities of cross-border and intra-industry mergers, particularly regarding power dynamics and strategic alignment. The continued partnership on EV technology suggests that collaboration, rather than full integration, may be a more feasible approach for Honda, Nissan, and Mitsubishi in the short term.
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