Japan’s leading automakers Honda and Nissan cancelled merger talks, a move that puts an end to rumors on what would have been the world’s third-largest automaker with a combined worth of some $60 billion. Even following the failure of these negotiations, the two automakers reaffirmed a willingness to continue working together in electric vehicles as it grapples with mounting global competition.
The two carmakers issued a joint statement on Thursday affirming the decision to cancel the memorandum of understanding (MOU) dated December 23 last year, which had defined the prospect of business synergy.
The proposed merger was generally understood to be an attempt to better compete with market leaders like the United States’ Tesla and Chinese producers in the rapidly growing electric vehicle market Tata’s electric vehicle push with TPEM listing. But the negotiations were complicated, particularly over structural differences. As per sources, Nissan walked out of the talks as Honda proposed restructuring the tie-up such that Honda would be the parent company and Nissan a subsidiary.
In their statement, Honda and Nissan acknowledged that, after extensive negotiations, it was most appropriate to terminate negotiations and cancel the MOU. Both companies, however, expressed their willingness to establish a strategic alliance for the development of electric and intelligent vehicles. The collaboration is designed to create new value and assist in improving the corporate status of both automakers.
The discussions on merger were first instigated late last year, and Mitsubishi Motors were also in talks, although afterwards it was considered that Mitsubishi wouldn’t be participating in any deal of merger.
Honda and Nissan both face huge challenges in the motor industry, among others from threats by increasingly emerging Chinese electric vehicles by such firms as BYD that have rocked the industry, especially China. Additionally, both businesses expect potential tariffs to the profitable United States.
Now that the talks for a merger are over, Nissan is scouting new partnership opportunities, with Taiwan’s Foxconn cited as one of the possible partners. Foxconn Chairman Young Liu stated the firm would consider investing in Nissan, emphasizing the ultimate goal is still cooperation within the industry.
