On February 13, Honda Motor Co. announced that it had agreed to terminate the memorandum of understanding (MoU) signed on December 23, 2024, with Nissan Motor Co. and Mitsubishi Motors Corp. regarding the consideration of a three-party cooperation structure. This officially marks the cancellation of merger negotiations between Honda and Nissan. Had the negotiations been successful, the deal could have theoretically created a $60 billion automotive giant, making it the world's fourth-largest automaker by sales.
Although the plan to integrate Honda and Nissan under a single holding company has been abandoned, Honda, Nissan, and Mitsubishi will continue their strategic partnership. They will collaborate on in-house research and development in areas such as batteries, autonomous driving, software, and electric vehicle (EV) technology. This strategic partnership framework was established with the signing of an MoU on August 1, 2024, and aims to create new value while maximizing the potential of each company.
Nearly three months have passed since news first emerged about a potential Honda-Nissan merger. One side sought to expand its scale to compete with industry giants in an evolving global automotive landscape, while the other was looking for financial relief. The failure of the merger talks could have significant consequences for both Honda and Nissan, especially for the struggling Nissan, which now faces the challenge of finding alternative solutions to improve its weak financial position.
In the North American market, the resurgence of hybrid vehicle sales has placed Nissan at a disadvantage, while Toyota, a pioneer in hybrid technology, has benefited significantly. Nissan missed this window of opportunity, as its outdated product lineup lacks compelling hybrid models, and its EV offerings have also failed to gain a competitive edge.
In November 2023, Nissan reported a 93.5% year-on-year drop in net profit for the first half of the 2024 fiscal year (April–September 2024), falling to 19.22 billion yen. The company also slashed its full-year operating profit forecast for fiscal 2024 (April 2024–March 2025) by 70% to 150 billion yen. In response, Nissan is implementing a turnaround plan that includes cutting 9,000 jobs worldwide and reducing global production capacity by 20%.
In contrast, Honda remains more optimistic. The company aims to double its hybrid vehicle sales to 1.3 million units by 2030, up from 650,000 units in 2023 (excluding China). In December 2023, Honda executive Katsuto Hayashi stated, "We expect most of Honda's hybrid vehicle sales growth to occur in the North American market."
Additionally, after reporting financial results in line with expectations for the third quarter of the fiscal year (October 1–December 31, 2024), Honda maintained its full-year profit outlook. The company posted an operating profit of 397 billion yen ($2.6 billion) for the quarter, slightly below analysts' consensus estimate of 407 billion yen. However, growth in the U.S. market offset sluggish sales in Japan, China, and Southeast Asia. Honda still expects an operating profit of 1.42 trillion yen for the full fiscal year (April 1, 2024–March 31, 2025).
When Honda and Nissan began discussing brand integration under a holding company, Honda insisted that Nissan needed to resolve its internal issues before any deal could proceed. According to sources, Nissan, on the other hand, believed it could stabilize its struggling business without shutting down any factories. Bloomberg reported earlier this month that Honda's proposal to acquire Nissan and turn it into a wholly owned subsidiary was met with strong resistance from Nissan. Now, Nissan is actively seeking new partners to secure its future.
Foxconn Chairman Young Liu stated earlier this week that the company is open to purchasing Renault's 36% stake in Nissan. He also confirmed that Foxconn has engaged in discussions with both Nissan and Honda regarding potential collaborations.
Foxconn's interest in Nissan first emerged late last year but was put on hold when a potential Nissan-Honda deal seemed likely. Now that the merger negotiations have collapsed, Foxconn sees another opportunity to leverage its expertise in electronics manufacturing and establish itself as a key contract manufacturer in the EV industry.
