Honda, Nissan abandon plans for merger to create a mega Japanese automaker

Feb. 13 (UPI) -- Honda and Nissan announced Thursday they were terminating negotiations for a mega-merger that would have created the world's third-largest car company with sales of as much as $194 billion and annual profits in excess of $19 billion.

Plans for the merger, which would have also involved the smaller Mitsubishi to make the firms more competitive, were ditched in the interest of nimble "decision-making and execution of management measures in an increasingly volatile market environment heading into the era of electrification," Nissan said in in a statement.

Nissan indicated it was unhappy that the MOU the firms signed in December had morphed from forming a joint-holding company into a takeover where Honda would be the parent company and Nissan the subsidiary, through a share exchange.

However, Honda, Nissan and Mitsubishi committed to follow through on a separate MOU signed last summer to form a strategic partnership "aimed at the era of intelligence and electrified vehicles" that would work hard "to create new value and maximize the corporate value of each company."

The announcement came as Honda reported third-quarter 2024-2025 profit of $2.47 billion, up 4.6% on the same October-December period in 2023, on revenue of $36.4 billion, up 1.4%.

The company said it expected full-year profit to rise to $9.23 billion, up 2.8% from $8.99 billion in 2023-2024.

However, profits at Nissan, which also posted third-quarter results Thursday, plunged 78% to $202.2 million from the same period in 2023, even as revenue rose slightly to $20.55 billion.

It revised down its full-year 2024-2025 profit forecast to $780 million from $974.7 million earlier.

Both companies have been hit by falling sales in China amid growing market competition from domestic automakers, particularly in the EV segment.

Nissan released more details regarding a restructuring plan announced in November, saying it would include slashing 6,500 jobs from its U.S. and Thai operations and one-fifth of senior managers in the financial year ending Mar. 31, 2027.

Honda ruled out mounting a hostile takeover of Nissan following the collapse of the merger talks with CEO Toshihiro Mibe saying the company had never seriously considered the idea and had no plans to pursue it going forward.