Nissan may soon call off its merger discussions with Honda, according to a source familiar with the matter, as the automaker’s board prepares to meet to decide the next steps. The potential breakdown of these talks puts at risk a deal that could have created the world’s third-largest carmaker by sales, raising concerns about Nissan’s ability to navigate its financial and strategic challenges independently.
Reports of the merger talks faltering led to a surge in both automakers’ shares on Wednesday, with Honda gaining over 2% and Nissan rising 1.6%, even as Tokyo’s Nikkei 225 index saw a slight decline. The two companies had initially entered discussions last year, seeking a partnership that could strengthen their position against increasing competition from Chinese automakers such as BYD and new entrants in the electric vehicle (EV) market.
However, sources indicate that significant differences have emerged during negotiations. One of the primary concerns is Honda’s proposal to make Nissan a subsidiary, a move that Nissan reportedly sees as a departure from the original intent of the merger talks. Honda, which has a market valuation nearly five times that of Nissan, is also growing increasingly concerned about Nissan’s ability to execute a successful turnaround strategy, another source revealed.
Japanese media outlet Asahi Shimbun earlier reported that the merger could be abandoned, though official confirmation from both automakers remains pending. Spokespeople for Nissan and Honda declined to comment on the reports but reiterated that a formal announcement regarding the talks would be made in mid-February as planned.
Nissan has struggled more than some of its competitors in adapting to the shift toward electric vehicles, with its challenges compounded by internal turmoil dating back to the arrest and ouster of former Chairman Carlos Ghosn in 2018. The proposed tie-up with Honda was seen as a potential lifeline for the automaker, especially as it faces additional risks from possible tariffs under a new U.S. administration. Analysts suggest that any trade restrictions imposed on Mexico could impact Nissan more severely than its Japanese peers, Honda and Toyota.
The fate of the merger also holds implications for Renault, Nissan’s long-time alliance partner. The French automaker, which holds a 36% stake in Nissan (18.7% through a French trust), had previously expressed openness to a potential deal with Honda. However, with the future of the merger now uncertain, Nissan may need to explore alternative strategies to reinforce its position in an increasingly competitive automotive market.
