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The Nairobian

Honda and Nissan scrap merger talks

Business

By AFP | Feb 13, 2025

**A general view of the showroom at Nissan's global headquarters is pictured in Yokohama, Kanagawa prefecture on February 10, 2025.** [AFP]

Japanese auto giants Honda and Nissan confirmed on Thursday they had scrapped merger talks announced in December, ending a tie-up that would have created the world's third-largest automaker.

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.

Honda's CEO insisted in December that it was not a bailout for Nissan, which announced last year thousands of job cuts after reporting a 93 percent plunge in first-half net profit.

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Japanese media reports have said the discussions unravelled after Honda proposed making its struggling rival a subsidiary instead of the plan, announced in December, to integrate under a new holding company.

The automakers confirmed in the joint statement that 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".

The companies said they decided after discussions that "... to prioritise speed of decision-making and execution of management measures in an increasingly volatile market environment heading into the era of electrification, it would be most appropriate to cease discussions and terminate the MOU".

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 said.

The cancellation of the merger talks would have no impact on the earnings of both automakers, it said.

In a separate statement, Honda reported a net profit of 805.3 billion yen ($5.2 billion) for the nine months to December.

This was a 7.4 percent decline on-year chiefly due to a decline in sales in China, even though overall sales increased 8.9 percent to 16.3 trillion yen.

Honda made a slight change in its sales forecast for the full year to March, to 21.6 trillion yen from 21.0 trillion yen in the previous estimate, but kept its operating and net profit forecasts at 1.42 trillion yen and 950 billion yen, respectively.