Nissan has confirmed that it is still engaged in “various discussions” with Honda, following reports suggesting that the two companies are set to end their talks regarding a potential merger. The Japanese automakers had previously announced in December 2024 that they would explore a merger over the following six months, a deal that could have formed the world’s third-largest automaker.
Recent reports from Kyodo News, Nikkei, and Reuters indicated that Nissan may abandon the merger discussions. In response, Nissan issued a statement clarifying that the company had not made any announcements regarding the termination of talks. The automaker emphasized that it is still in the process of advancing discussions and plans to provide an update around mid-February.
The proposed merger, which would have included Mitsubishi—a smaller Japanese automaker already in an alliance with Nissan—was seen as a strategic move to bolster resources against the growing competition from Chinese carmakers. However, sources revealed that Honda recently proposed acquiring Nissan as a subsidiary, which was met with strong opposition within Nissan.
Financial concerns are also a factor in the merger discussions. Nissan has faced significant financial challenges, including a sharp 94% decline in profits in the six months ending in September 2024. The company has been struggling with a massive debt load, and some analysts have speculated that it could face bankruptcy as soon as 2026. Nissan’s restructuring efforts have failed to fully convince Honda that the company is on a solid path to recovery.
The auto industry is undergoing a major transformation as manufacturers ramp up their efforts to shift from gasoline-powered vehicles to electric vehicles (EVs). This transition is driving up research and development costs, which has led automakers like Nissan and Honda to explore mergers as a way to share these expenses. Nissan has found success with its Nissan Leaf EV, but the shift to electric mobility remains financially challenging for many legacy carmakers.
Despite the global push for electric vehicles, many automakers, including Nissan, are struggling to turn profits from EVs, with companies like Tesla and some Chinese automakers remaining more successful in the EV market.
Nissan and Honda’s potential merger echoes a broader trend in the automotive sector toward consolidation, as companies seek economies of scale to tackle the rising costs of EV development. However, the history of auto mergers has often been rocky, with notable failures like the Daimler-Benz and Chrysler merger in the late 1990s and Nissan’s alliance with Renault, which collapsed following the arrest of CEO Carlos Ghosn.
As the discussions continue, both Nissan and Honda remain tight-lipped about the future of their potential merger, with a clearer direction expected to emerge in the coming weeks.
