Merger talks between Japanese automakers Honda and Nissan have officially collapsed after the two companies failed to agree on the structure of a multi-billion-dollar tie-up.
The proposed deal, which also involved Nissan’s junior partner Mitsubishi, aimed to create a $60 billion (£48 billion) auto group, positioning it as the world’s fourth-largest carmaker—behind Toyota, Volkswagen, and Hyundai.
However, disagreements over Nissan’s role in the merger ultimately derailed negotiations. While both companies have vowed to continue their electric vehicle (EV) partnership, the failed talks leave Nissan facing an uncertain future amid fierce global competition.
Why Did the Merger Fail?
Industry analysts say the breakdown was not entirely unexpected.
“Plenty of automotive mergers have not worked out, and this one had as much potential for disaster as it did to help both brands,” said Karl Brauer of iSeeCars.com.
Honda entered the negotiations from a position of strength, as a globally popular brand that sells more cars than Nissan. Meanwhile, Nissan has struggled for years—especially after the dramatic 2018 arrest of its former CEO Carlos Ghosn, who later fled Japan in a music equipment box to avoid trial.
The merger was seen as a potential lifeline for Nissan, which has faced slowing sales, cost-cutting measures, and a leadership crisis. However, Honda insisted that any deal required Nissan to complete its internal turnaround efforts first.
The final stumbling block? Nissan wanted an equal partnership, while Honda reportedly saw it more as a takeover.
“The pressure to make it appear like a merger of equals in Japan is very strong,” said Jesper Koll of Monex Group. “Having somebody leading this would seem almost offensive to the other party.”
Some experts also warned that Honda might have come off worse in the deal. Koll added, “You’re taking a potentially great company and taxing it with having to bail out an ugly duckling.”
Electric Vehicles and Chinese Competition
Both Nissan and Honda are under mounting pressure to accelerate their EV strategies, as Chinese automakers—led by BYD—dominate the global market.
In March last year, the two firms agreed to explore a strategic partnership for EV development, recognizing that failure to adapt could be disastrous.
“The talks started because we believe that we must build up capabilities to fight them [Chinese manufacturers] by 2030,” said Honda CEO Toshihiro Mibe. “Otherwise, we will be beaten.”
Despite the collapse of the merger, their collaboration in the EV sector is expected to continue.
What’s Next for Nissan?
With the Honda deal off the table, Nissan now faces an uncertain road ahead. However, a potential new investor has emerged—Taiwanese tech giant Foxconn, best known for manufacturing Apple’s iPhones and advanced computer chips.
Foxconn chairman Young Liu confirmed that the company is considering buying Nissan shares for “co-operation.”
Meanwhile, Renault—Nissan’s longtime French partner—criticized the Honda deal as “unacceptable” and may play a key role in any future restructuring. Renault holds a 36% stake in Nissan after rescuing the company from near-bankruptcy in 1999.
Analyst Karl Brauer believes Nissan’s future will depend on leadership that can balance strategic synergies with political and cultural sensitivities.
As the auto industry undergoes a seismic shift towards electrification, Nissan will need to act fast to stay competitive—or risk falling further behind.
