Honda and Nissan cancel $60B merger

Japanese automotive giants Honda and Nissan have officially abandoned their planned $60 billion merger, which would have created the world's third-largest auto group by volume. The announcement came as both companies prepared to release their quarterly earnings reports.

The merger talks, initially announced in December with hopes of concluding by June 2025, collapsed due to growing differences between the two manufacturers. Sources familiar with the matter revealed that Honda's proposal to make Nissan its subsidiary was a significant factor in derailing the negotiations.

Despite the merger's cancellation, both companies will maintain their strategic partnership in software development and other areas, alongside Nissan's existing alliance partner, Mitsubishi Motors. The collaboration aims to address the mounting challenges in the automotive industry, particularly the rapid rise of Chinese electric vehicle manufacturers like BYD and competition from Tesla.

The failed merger comes at a crucial time for both companies as they face industry-wide challenges, including potential U.S. tariffs and market disruption in China. Nissan, currently implementing a significant restructuring plan announced in November, is proceeding with its strategy to cut 9,000 jobs globally and reduce production capacity by 20%.

Honda's concerns about Nissan's turnaround progress reportedly influenced the merger's outcome. The companies had initially planned to establish a holding company in 2026, with the merger intended to help share the increasing costs of electric vehicle and software development.

The announcement marks a significant shift in the Japanese automotive landscape, as both manufacturers now must individually navigate the industry's transformation toward electrification and advanced technology implementation.