Key Takeaways:

• Nissan and Honda have officially ended their merger discussions, which were expected to create a $60 billion auto group.
• The decision comes amid complications, including Honda's proposal for Nissan to become a subsidiary.
• Nissan is now looking to collaborate with new partners, notably Taiwan's Foxconn.

Nissan and Honda, Japan's second and third-largest automakers, announced they would officially terminate their merger discussions that began in December. The proposed tie-up was projected to create one of the world’s largest auto groups, worth approximately $60 billion. However, the negotiations collapsed primarily due to diverging visions and Honda's insistence that Nissan should take on a subsidiary role, conflicting with previous ideas to establish a joint holding company.

In their joint statement, the companies emphasized that the decision to cease discussions stemmed from the need to prioritize agile decision-making amid the rapidly evolving automotive landscape dominated by electric vehicles. Both firms acknowledged the intense competition from emerging players in the electric vehicle market, particularly from Chinese manufacturers like BYD.

As a result of these developments, Nissan is now shifting its focus towards new partnerships rather than merging with Honda. Foxconn, known for its significant role as an electronics manufacturer and for its ambitions in the automotive sector, has emerged as a potential collaborator. Foxconn Chairman Young Liu has publicly stated that while acquiring shares in Nissan is not the primary goal, cooperation between the two companies is on the table NY Times.

Both automakers stated their commitment to continue collaborating in the field of electric vehicles and related technologies, as the industry navigates through significant changes brought forth by the shift towards electrification. Honda and Nissan have committed to maintain a strategic partnership focused on developing new technologies and advancing their market positions amid increasing pressures from both legislative actions and industrial competition.

The end of the merger discussions comes at a challenging time for Nissan, which has been grappling with falling profits and a need for a significant turnaround strategy following its management crisis initiated by the 2018 arrest of former chairman Carlos Ghosn. Meanwhile, Honda continues to face similar pressures in adapting to the evolving landscape.

The Japanese automotive landscape is under pressure as it seeks to innovate while navigating the realities of a hybrid and electric vehicle future, setting the stage for new alliances and cooperative ventures in years to come.

For more details, visit Channel News Asia.