Merger negotiations between Honda and Nissan have officially collapsed after months of discussions, with both companies unable to agree on key terms, according to BBC News. The failed deal, initially slated for completion by 2026, aimed to create the world's third-largest automaker, with a combined market value of USD 58 billion, Asia Express reported on December 26, 2024. The merger was primarily driven by the need to scale up operations and counter growing competition from Chinese automakers, particularly in the electric vehicle (EV) sector. However, governance disputes and differing strategic visions ultimately derailed the agreement, with Honda insisting that Nissan complete its restructuring before finalizing the deal.

 

Despite the breakdown in merger talks, Honda and Nissan have agreed to continue collaborating on EV development, a partnership that has been in place since March 2024. The growing dominance of Chinese automakers, such as BYD, has intensified the urgency for Japanese manufacturers to strengthen their position in electrification, software development, and autonomous driving. However, without the merger to provide financial stability, Nissan faces an uncertain road ahead, having already implemented cost-cutting measures, including shedding 9,000 jobs globally and reducing executive salaries. Meanwhile, Taiwan’s Foxconn has expressed interest in acquiring a stake in Nissan to explore strategic cooperation in EV and smart vehicle technology.

 

Amid these developments, the Market Intelligence & Consulting Institute (MIC) forecasts global EV shipments to reach 19.03 million units in 2025, marking a 13.7% increase from 2024. Although EV market growth slowed in 2024 due to trade protectionism and reduced subsidies, China remains dominant, accounting for 60% of global EV sales from 2019 to 2023. The collapse of the Honda-Nissan merger underscores the challenges facing Japan’s automotive industry as companies navigate increasing competition and shifting global EV policies. Moving forward, alternative strategic alliances—whether with domestic rivals or global technology firms—may become necessary for survival in the evolving market landscape.