Honda, Nissan, and Mitsubishi have officially announced that merger discussions among the three companies have ended. According to reports, the once-promising plan fell through mainly because Nissan resisted becoming a subsidiary of Honda and was unable to present a short-term profitability strategy.
In official press releases, both parties confirmed the end of negotiations and acknowledged earlier reports that Honda had intended to make Nissan its subsidiary.
Initially, Honda proposed forming a joint holding company through an equity transfer. However, during discussions, this evolved into a plan where Honda would become the parent company, acquiring Nissan as a subsidiary through an equity swap. This was one of several scenarios considered.
Additionally, a memorandum of understanding (MOU) set to be signed on December 23 by Honda, Nissan, and Mitsubishi was canceled. The agreement had outlined Mitsubishi’s potential involvement in the merger, but despite calling off the deal, all three companies remain committed to collaborating on electrification and new energy technologies.
Throughout the talks, media reports revealed tensions behind the scenes. Beyond Honda’s push to make Nissan a subsidiary, reports suggested that Honda opposed Renault’s involvement and urged Nissan to repurchase its shares from the French automaker. Meanwhile, Mitsubishi ultimately decided against joining the merger, opting instead to maintain its independence.
The collapse of the merger leaves Nissan facing even greater uncertainty. Among traditional automakers, Nissan remains one of the most troubled, still struggling to recover from the financial and leadership crisis that began with the arrest and removal of former Chairman Carlos Ghosn in 2018.
Shortly after announcing the failure of the merger, Nissan revised its full-year earnings forecast downward for the third time on February 13, reporting another sharp decline in quarterly profits. The company cut its operating profit forecast for the current fiscal year by 20% to 120 billion yen after posting a 78% drop in third-quarter operating profit.
In response, Nissan unveiled a new cost-cutting plan aimed at reducing expenses by approximately 400 billion yen ($2.6 billion) by fiscal 2026. Measures include cutting labor costs and restructuring its manufacturing operations.
The company also plans further plant closures. Reports indicate Nissan will shut down its Thailand facility by June, followed by two additional plant closures (specific locations have not been disclosed). The automaker had already announced plans to lay off 9,000 workers and reduce global production capacity by 20%.
Further cutbacks are expected in China. Nissan currently operates eight plants in the country through a joint venture with Dongfeng but has already suspended production at its Changzhou plant in Jiangsu province.
In addition to operational restructuring, Nissan plans a major leadership overhaul. Starting next fiscal year (April), it will eliminate its executive management system and reduce the number of executive positions by 20%. The company is also open to new partnerships, including potential collaboration with Taiwan’s Foxconn. Foxconn Chairman Liu Yangwei confirmed that while Foxconn is considering investing in Nissan, its primary goal is cooperation rather than ownership.
Nissan’s market capitalization now stands at just one-fifth of Honda’s, which is valued at approximately 7.5 trillion yen ($48.6 billion). A decade ago, both companies had similar market capitalizations of about 4.6 trillion yen. After merger discussions were first reported on December 17, Nissan’s stock surged over 60% in late December, while Honda’s rose by about 26%. Since then, those gains have settled to 21% and 11%, respectively.
The collapse of the merger marks a turning point in Japan’s auto industry. While large-scale consolidation has been put on hold, the commitment to collaboration in advanced fields such as electrification and smart mobility remains strong. Moving forward, the challenge will be finding the right balance between independent operations and strategic partnerships.
