Nissan to end merger talks with Honda

Japan’s Nissan is calling off merger talks with rival Honda, abandoning a tie-up that would have created the world’s third-largest automaker. Nissan shares fell more than 4% before trading was temporarily halted by the Tokyo Stock Exchange after the report. Honda shares continued to trade and ended the day up more than 8%, in a sign of apparent relief among investors that the deal would be scrapped, reported by Reuters.

Honda, Japan’s second-largest carmaker, and Nissan, the third-largest, said last year they were in discussions to merge to create the world’s third-largest automaker by sales, expanding in an industry that faces a major threat from China’s BYD and other electric vehicle entrants.

Honda could become a subsidiary of Nissan

But the talks are being complicated by growing disagreements on both sides, according to two people familiar with the matter, both of whom declined to be named because they were not authorized to speak to the media. There have been previous reports that Nissan could end the talks. As of late Tuesday, the board was still meeting to decide on its next course of action. Honda has told Nissan that it could become a subsidiary, a departure from initial talks that were initially framed as a merger of equals.

Nissan and Honda said in separate statements that they aimed to finalize the future direction of the merger by mid-February and announce it then. The development raises new questions about how the beleaguered Nissan could have survived the latest crisis without outside help. Nissan is in the midst of a restructuring plan that aims to cut 20% of its global capacity.

Nissan hit by electric car shift

Another person said Honda, which has a market value of nearly five times that of Nissan, was increasingly concerned about its smaller rival’s progress in executing its turnaround plan. The merger talks have coincided with disruptions caused by potential tariffs from U.S. President Donald Trump. Analysts say tariffs on Mexico would be more painful for Nissan than for Honda or Toyota.

Nissan has been hit harder than some other automakers by the electric car shift, having never fully recovered from a years-long crisis triggered by the arrest and ouster of former chairman Carlos Ghosn in 2018. The news that Nissan does not want to be a Honda subsidiary highlights that control has been a contentious issue. Nissan and Honda initially said they planned to decide on the direction of the integration by the end of January, but that was later pushed back to mid-February.