Nissan is set to call off merger talks with rival Honda, a source said on Wednesday, abandoning a $60 billion-plus tie-up that would have created the world’s no. 3 automaker and raising questions about how it will drive a turnaround by itself.
Talks have been complicated by growing differences between the two Japanese automakers, two people familiar with the matter, both of whom declined to be named because they were not authorized to speak to the media, said earlier.
Nissan shares slid more than 4% on the Tokyo Stock Exchange, which temporarily suspended trading in the stock after a Nikkei Business Daily report that it would pull out.
Honda shares continued to trade and finished the day up more than 8%, in a sign of apparent investor relief.
The development will raise fresh questions about how hard-hit Nissan, which is in the middle of a turnaround plan and aims to cut 9,000 employees and 20% of global capacity, can ride out its latest crisis without external help.
Honda, Japan’s second-largest car maker behind Toyota and Nissan, its third-largest, said in December they were in talks to create the world’s third-largest automaker by sales, bulking up in an industry facing a huge threat from China’s BYD and other electric vehicle entrants.
Reuters reported earlier that Nissan could call off talks after Honda had sounded it out about becoming a subsidiary.
Nissan balked because this was a departure from what was originally framed as a merger of equals, one source said.
Nissan and Honda said in separate statements that the Nikkei report was not based on information announced by the companies and that they aimed to finalize a future direction by mid-February and announce it at that time.
Honda, whose market value of about $51.90 billion is more than five times bigger than Nissan at 1.44 trillion yen, was increasingly worried about its smaller rival’s progress on the turnaround plan, said a second source.
The tie-up talks have coincided with disruption posed by potential tariffs from US President Donald Trump.
Tariffs against Mexico would be more painful for Nissan than for Honda or Toyota, analysts say.
“Investors may get concerned about Nissan’s future [and] turnaround,” said Morningstar analyst Vincent Sun. “Nissan also has a larger risk exposure to US-Mexico tariffs than Honda and Toyota”.
Nissan has been hit harder than some rivals by the shift to EVs, having never fully recovered after years of crisis sparked by the 2018 arrest and removal of former chairman Carlos Ghosn.
“The news saying that Nissan did not want to be a Honda subsidiary appears to highlight that control was a contentious issue,” said Christopher Richter, Japan autos analyst at brokerage CLSA. “Without being able to have control, Honda appears to be walking away.”
Nissan’s long-term alliance partner Renault had said it would be open in principle to the merger.
The automaker owns 36% of Nissan, including 18.7% through a French trust.
Nissan and Honda had initially said they planned to decide the direction of the integration by the end of January, but that was later pushed back to mid-February.
Sources told Reuters last month that Nissan’s smaller alliance partner Mitsubishi Motors, which had considered joining the merger, might not do so.
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