Honda and Nissan on Thursday announced the scrapping of merger talks that would have created the world's third-biggest auto company by unit sales behind Toyota and Volkswagen.
Here are some key points about why the Japanese companies explored a tie-up, the reasons for their failure, and where this leaves them in a difficult global auto industry.
What is their history?
Honda was founded in 1948 as a small factory making motorcycles and is now the world's biggest producer of the two-wheelers. It also makes 3.7 million four-wheel vehicles annually.
More than 40 percent of these were sold in North America last year, roughly 20 percent in China, 18 percent in Japan and three percent in Europe.
Nissan, founded in 1933, produced 3.1 million cars last year. North America accounts for 38 percent of its global sales, China 20 percent, Japan 14 percent and Europe 10 percent.
French automaker Renault took a 36.8 percent stake in the then loss-making firm in 1999 and Mitsubishi Motors joined the alliance 17 years later, with Nissan taking a 34-percent stake in its struggling Japanese rival.
But tensions emerged, stoked by the French state increasing its stake in Renault in 2015, followed by the 2018 arrest of Nissan boss Carlos Ghosn in Japan on suspicion of financial misconduct and his subsequent flight from the country.
In 2023, Renault sold part of its stake in Nissan as part of an alliance overhaul that saw them retain 15 percent cross-holdings.
Why did they try to merge?
Nissan has been struggling, last year reporting a 93-percent plunge in first-half net profit and axeing 9,000 jobs in November. It is also saddled with billions of dollars of debt.
For both companies, achieving economies of scale would have served to "enhance R&D capabilities, and better compete" in the areas of "advanced technologies including electrification and software-defined vehicles", said Tatsuo Yoshida, senior auto analyst at Bloomberg Intelligence.
Japanese carmakers have long lagged in the electric vehicle sector, especially against Chinese firms, with the country's leading EV-maker BYD last year selling more vehicles globally than Honda and Nissan.
The pair had already agreed on talks over partnership in electrification technologies and software development, and were later joined by Mitsubishi Motors.
Why did merger talks fail?
When the merger talks were announced in December the plan was that the two automakers along with Mitsubishi Motors would integrate their businesses under a new holding company.
But local media reports have said Honda, frustrated by its rival's slow decision-making on restructuring, wanted to make it a subsidiary, which Nissan's leadership found unacceptable.
"Nissan appears to be stressing its independence and freedom of (decision-making on) its strategy," which "for Honda's eyes may not maximise benefit of economy of scale," Mizuho Securities analyst Yoshitaka Ishiyama said.
What happens next?
In the long term at least, both firms will need to seek alternative partners as they look to get a leg-up in the technology race, analysts say.
"For Honda, there remains a concern about how to beef up its four-wheel vehicle business," said Seiji Sugiura, auto analyst at Tokai Tokyo Intelligence Laboratory.
"The fact that Honda executives had wanted to merge with Nissan means that they needed a close collaboration in R&D at a deeper level than an alliance, (which) involves sharing confidential company information," he added.
Nissan's position is worse, as it "faces significant challenges, including financial instability and the need to strengthen its position in the advanced technology battlefield", said Bloomberg's Yoshida.
Sugiura added that tech firm Foxconn "remains to be an option for Nissan".
Recent reports have said the Taiwanese giant, also known as Hon Hai, had been in talks with Renault over buying the French automaker's stake in the Japanese firm.
However, Sugiura added that a Foxconn-Honda tie-up was also possible "as it has technologies Honda wants".
And he added: "If Honda really wants Nissan's technology, it can launch a hostile takeover bid of Nissan."
© 2025 AFP
26 Comments
Login to comment
JeffLee
If I were Nissan, I would focus on making basic stripped down low-priced models, like the Versa, which would be reliable and cheap to repair due to their simple construction. Car ownership is becoming increasingly unafforable for people in Western countries. Eventually the low and mid-income earners will be buying Chinese cars, unless Nissan and others respond to the trend.
Sh1mon M4sada
Yes, but convincing Nissan to do so is the challenge. Nissan lost all of its financial disciplines long ago, with Infinity, GTR, Patrol...so execs can have plush rides, whilst the company struggles.
I drive on the east coast, see Hondas every where, west coast, Toyotas, Nissan hardly ever, and usually old junkers.
Aly Rustom
honda dodged a bullet
HopeSpringsEternal
Honda ok, Nissan's bleeding cash with major debt servicing pressures building, maybe Renault finally merges with Nissan?!
Nissan's share price if the same as Renault, would now be more valuable than Honda, not +5x less valuable.
OssanAmerica
Nissan will be back. Clearly they have to roll up their sleeves and do their homework. Maybe even hire an outside foreign CEO (LOL). But they will be back. Nissan has been making cars from before every poster here were born (1934).
Poo-pooing on Nissan may be the trendy thing here but it doesn't reflect a long term reality.
kohakuebisu
I guess the fear here is that a Chinese maker like BYD puts lots of money into Nissan and gets a massive foothold in Japan. All the dealer network etc. There will still be large resistance to people buying cars off a website.
If Chinese manufacturers look about to dominate, I wonder if this would delay introduction of more charging infrastructure in Japan. This is very easy to do by the government simply not subsidizing the rollout, knowing that it would merely hasten the demise of engine based manufacturers.
WoodyLee
NOTHING should happen, just let Mr. Uchida handle his own problems or step aside but with a $4,000,000 annual salary I doubt he will.
WoodyLee
@jefflee...
""If I were Nissan, I would focus on making basic stripped down low-priced models,""
Yes Yes Yes, there are many new models coming out from India, Russia, Brazil, even Germany that are as basic and simple as it gets and before you know it the big auto makers will have to roll back to Basic and start making them for under $10,000. Just watch and see.
WoodyLee
Back home I owned 3 used Datsun's a 510 then a 280Z and finally a 300Z and I loved them, all were manual both Z were 5 speed. I drove the last two missiles for a total of 8 years combined no major issues what so ever, raced them against Porsche 911, Corvettes, Camaros, even a Ferrari 308GT and did quit well.
Thank You Datsun, it was the best years of my life.
Jind
I cannot afford a new car as they are very expensive.
I drive a 23-year-old Mercedes car and there is nothing wrong with it as I have maintained it over the years.
HopeSpringsEternal
Nissan will continue to increasingly outsource production to 3rd party manufacturers and then just slap their lousy logo on the car to be sold, pathetic stuff, as Nissan will continue to hollow out and become irrelevant.
wallace
Do people still need cars? I haven't owned one for 46 years. My last model was a Rover 90 P6 in 1979.
Al Ahu Snackbar
@walace Yes, people still do need cars. I prefer models with big engines which is good for our climate.
HopeSpringsEternal
For those with families, cars are very helpful, though it seems very few here on JT actually have kids, so I guess it's easy to understand their aversion to cars.
If you do need a car, I'd recommend Honda over Nissan, as Nissan will likely not survive long-term, nothing worse than owning a car of a company no longer in business.
wallace
Someone votes down a question.
HopeSpringsEternal
Tolerance is key, don't push views on others, plenty of people drive for many reasons and they tend to be 'going places', now those without cars, they're not going anywhere fast, but they can still get there too...often in their friends' car, as these types are often grifters!
Again, avoid Nissan folks, doom loop/bankruptcy, Honda = OK!
wallace
HopeSpringsEternal
I did not but most of your comments do.
In Tokyo, less than 50% of homes have a car. In New York, it's 45%.
GuruMick
I have a Nissan Tiida...done about 100,000 k,s in it...now has over 200,000 on the clock...some minor issues but overall good buy at around US$ 5000 ...with 2 year warranty and 4 new tyres.
Cant get that in Aust,
On Aust. websites you see many/most cars with greater than 150,000 k,s on them.
People in Japan are afraid of mileage.
HopeSpringsEternal
Sounds TERRIBLE, Nissan, +200k and 760000 Yen plus taxes. Even if you cut your price in half, still a terrible deal, warranty sounds very doubtful as well, as the car must be old as dirt. Minor issues, yeah right!
Then again, all it takes is one sucker, so good luck, you better be "Sales" Guru to sell that junk heap!
HopeSpringsEternal
Car less types tend to not have kids, while car owners the opposite. Translation? People with kids need cars more than the childless. It's logical, cars offer safety, convenience and time savings that parents require.
Either way, better off in a Honda than a Nissan!
GuruMick
Hope...well I,m happy with the car , price and longevity....sorry you are not....not your car though is it ?
GuruMick
PS...reread my comment...I have done 100,000 k,s....it HAD 100,000 k,s when I bought it.
Did a Nissan run into your car when you were younger ?
You need to move on from this "Nissan phobia "
HopeSpringsEternal
Understood you had a 100K when you bought it, I'm just wondering if you ever changed the oil? The only value Nissan has is low cost, product's been inferior forever. Glad you're happy, as it sounds like real clunker!
That said, my Father-in-Law loves his Nissan, fast six-cylinder sedan, forgot the name, buys a new one every few years, strictly a Nissan guy but ONLY reason is that Nissan's origins are from western Japan, Hiroshima.
HopeSpringsEternal
GM, what did you originally pay for your Tilda, surely under 1M yen...had an MR2 for few years, flipped it for a slight profit, so I get it, now strictly family guy, no more racing around!
TorafusuTorasan
@HSE--not Tilda. The car is named Tiida, presumably using the Ryuku dialect word for taiyo/sun.
Pukey2
Haven't driven in 20 years. Public transport is good (not living in USA helps), I walk a lot for exercise, and I don't want to waste money on buying a car that's going to lose value in a flash, gas, taxes, shaken, insurance and repairs.