Proposed Honda-Nissan merger hits the rocks

Nissan has called off its merger talks with Honda, with the Japanese brand rumoured to have scrapped the deal that would have created the world’s third-largest carmaker.

According to sources speaking to Reuters, the scrapping of the $US60 billion ($A96 billion) was prompted by irreconcilable differences between the two brands, with Nissan now preferring to go ahead and launch its own turnaround.

Announcing at the end of last year that both Nissan and Honda were in talks to join forces by 2026 in a deal that could have potentially included Mitsubishi, the two brands were motivated to team up by the prospect of being able to pool resources and share the huge cost of developing their next-generation EVs.

Combined, both Honda and Nissan would also be able to streamline manufacturing, reduce backroom overheads and ramp out the R&D spending needed to fund future EVs, software-defined vehicles, and help it expand into fully autonomous vehicles.

The snag is that it was never a marriage of equals – with Nissan suffering a sales drop-off in the US and China, it was only given 12 months to live by some analysts.

This meant that, much to Nissan’s chagrin, Honda – worth more than five times as much as its partner – would effectively gain control of the ailing brand.

In response to the rumours the deal was off Nissan’s shares slumped while Honda’s stock value climbed by eight per cent, with investors clearly relieved the merger wasn’t going ahead.

Triggering the breakdown was Honda suggesting Nissan should become more of a subsidiary, rather than an equal.

Another disruptive influence in the merger was President Trump’s proposed tariffs for Mexico, which would have been more painful for Nissan than Honda.

Originally Nissan and Honda said they would update the markets about the proposed 2026 merger before the end of January, before pushing back the announcement to mid-February.

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