Nissan Suspends Merger with Honda Ending 'World’s Third-Largest Automaker' Vision

What Happened?

The planned vision between a Honda and Nissan merger has reportedly come to an end.

According to reports, Nissan president Makoto Uchida informed Honda president Toshihiro Mibe that he was pulling out of merger talks announced in December.

The companies, alongside automaker Mitsubishi Motors, aimed to create what would have been the world’s third-largest automaker after signing a memorandum of understanding.

Honda reportedly proposed making Nissan a subsidiary, which complicated talks as things continued forward.

A consensus was later reached on Nissan's side that the talks could not proceed under that proposal, according to Reuters.

Mitsubishi Motors, which has Nissan as a major shareholder, turned down the merger in late January, according to Japanese news outlet Yomiuri.

Nissan is reportedly open to working with new partners after the struggling Japanese automaker has its back against the wall once again.

The deal would have been the latest major shift in the auto industry.

Nissan Motor Co. and Honda Motor Co. sought combined sales of $191 billion and an operating profit of more than $19 billion through the move.

Both companies planned to integrate through a joint holding company to combine resources amid a growing threat from Chinese carmakers like Toyota.

Why it Matters

Nissan has struggled since the collapse of its alliance with Renault.

Before merger announcements, the legacy brand was reportedly in jeopardy of facing bankruptcy as early as 2026 amid huge amounts of debt soon due.

Experts view Nissan's latest move to pull out as a huge gamble amid outdated product lineups that have affected their bottom line.

A 94% drop in net income was reported by Nissan for the first half of the company's quarter earnings, according to Bloomberg.

The company said it would need to cut a fifth of its manufacturing capacity and lay off 9,000 workers.

Chinese automakers and U.S. all-electric maker Tesla are just a few that have put pressure on Nissan and Honda to perform and turn a profit in the marketplace.

Many automakers have struggled overall from the impacts the COVID-19 pandemic has had on the industry.

The current market also faces much uncertainty amid the looming threats of tariffs between key U.S. trading partners like China.

How it Affects You

The failed merger news further puts Toyota ahead of those like Honda, Nissan, and Mitsubishi combined as the leading Japanese automaker.

These production gaps often play a huge role in pricing measures surrounding supply and demand without more balanced competition.

Consumers could experience more challenges in the near future when searching and exploring the continuously evolving auto market.