Nissan Motor will stop merger discussions with Honda Motor, Reuters has reported. Honda proposed that Nissan become its subsidiary, differing from their original plan of establishing a holding company, as per reports. Further, talks became difficult given the increasing differences on both sides. Mitsubishi had earlier pulled out from the joint venture talks with Honda. This effectively puts on hold what would have been the world's number three car brand.

1. Honda shares rose by 8 percent after the news broke
2. Shares in Nissan slid over 4 percent on the Tokyo Stock Exchange

Notably, this comes after Reuters reported Nissan could cancel the discussions, and a board meeting was scheduled to decide a course of action.

Honda and Nissan merger talks explained

In late 2024, Honda and Nissan started discussions to come together and form the world's fourth largest automaker by sales. The joint holding company would have allowed the two to share more resources to take on Chinese EV brands and Tesla amid increasing global competition. 

In March 2024, Honda and Nissan signed an MoU to study sharing an EV platform and develop a common electric powertrain. They then expanded the collaboration with a new MoU in August, which would see them work together on the development of EVs, especially SDVs (Software-Defined Vehicles) that use artificial intelligence and have ADAS tech.

Globally, Nissan is part of an alliance with Renault and Mitsubishi Motors. Renault, which has a 36 percent stake in Nissan, had said it would be okay in principle to the amalgamation with Honda. Autocar India recently reported that Honda asked Nissan to buy back its stake from Renault to prevent an unknown third party from acquiring it during the merger, which could cause delays.

What does Nissan say

A Nissan representative noted that the original Nikkei report was "not based on information announced by Nissan". "We aim to finalise our direction by mid-February and will announce it then," he added.

What does Honda say

On the Honda side, a representative said the firm had not heard back from Nissan regarding the decision to withdraw from the MoU of working on a tie-up. 

SOURCE