Nissan Motor Co. is backing out of its agreement with Honda Motor Co. to merge the two brands and enhance global competitiveness, according to a report by Nikkei on Wednesday.
The Japanese automakers had been in talks to create a partnership where Honda would absorb Nissan, with plans to combine both brands under a single holding company by 2026.
The two competitors were unable to reach an agreement after seven brief but intense weeks of negotiations, according to the newspaper, which cited unidentified sources.
This marked a rapid end to what could have been a historic partnership for Japan’s auto industry.
Honda and Nissan are exploring various options, including the possibility of withdrawing from the deal, both companies said in separate statements to the Tokyo Stock Exchange.
A framework for ongoing negotiations will still be announced as planned, though delayed once already, in mid-February, according to spokespeople.
Tensions between the two companies arose this week after media reports revealed that Honda proposed a full acquisition, a suggestion that was strongly opposed within Nissan.
Following the Nikkei report, the Tokyo Stock Exchange halted trading of Nissan’s shares. Honda’s shares climbed 8.2%, while Nissan’s dropped 4.9%.
When initial reports of a potential merger surfaced in December, it was evident that Honda, with a market value more than four times greater than Nissan’s, had the advantage.
Upon announcing the deal, Honda emphasized that Nissan would need to implement a restructuring plan for the transaction to move forward.
Nissan is grappling with chronic issues such as an outdated product lineup, excessive dealership incentives, and unstable leadership. Without Honda’s support, it remains uncertain how the brand plans to recover and regain momentum.
