The potential tie-up would have created the world’s third-largest automaker, rivaling US and Chinese companies.
Japan’s second and third-largest automakers, Honda and Nissan, have announced that their boards had voted to end talks to merge, even as they pledged to continue their cooperation on electric vehicles amid intensifying global competition.
Thursday’s announcement brings to an end a potential tie-up that would have created the world’s third-largest automaker, worth some $60bn.
The firms said in a joint statement that they “agreed to terminate the MOU (memorandum of understanding) signed on December 23 last year for consideration of a business integration between the two companies”.
The firms’ intention to join forces had been seen as a bid to catch up with US titan Tesla and Chinese firms in the electric vehicle market.
Nissan reportedly backed out of the talks with larger rival Honda after negotiations were complicated by growing differences, including Honda’s proposal that Nissan become a subsidiary, sources had previously told the Reuters news agency.
In the joint statement, the automakers confirmed Honda “proposed changing the structure from establishing a joint holding company… to a structure where Honda would be the parent company and Nissan the subsidiary through a share exchange”.
As a result of the talks, both companies concluded that “it would be most appropriate to cease discussions and terminate the MOU,” the statement said.
They will, however, continue to “collaborate within the framework of a strategic partnership aimed at the era of intelligence and electrified vehicles, striving to create new value and maximise the corporate value of both companies”, it added.
The automakers, and junior partner Mitsubishi Motors, had announced they would consider the merger late last year. Sources later told Reuters that Mitsubishi was unlikely to participate.
Honda and Nissan have seen their industry and the key China market upended by the rapid rise of Chinese electric vehicle makers such as BYD, and both are facing the prospect of tariffs in the US, another key market.
With the collapse of merger talks, Nissan is now open to working with new partners, with Taiwan’s Foxconn seen as one candidate.
Foxconn Chairman Young Liu said on Wednesday it would consider taking a stake in Nissan but that its main aim was cooperation.