Key Takeaways:

• Honda and Nissan scrap plans for a $60 billion merger aimed at forming an automotive giant.
• The decision was driven by disagreements over the merger structure and the need for rapid decision-making.
• Both companies will continue to collaborate on electric vehicle technologies within a strategic partnership framework.

Two of Japan's largest automakers, Honda and Nissan, announced on February 13 that they have officially terminated talks to merge, which would have created the world's third-largest automotive company valued at approximately BBC $60 billion. The decision follows growing concerns regarding the structure of the proposed merger, particularly Honda's suggestion to make Nissan a subsidiary rather than forming a joint holding company.

According to a joint statement released by both companies, both parties agreed that it would be most appropriate to cease discussions "to prioritize speed of decision-making and execution of management measures" amidst an increasingly volatile automotive market, particularly in the shift towards electric vehicles. The New York Times reported that both companies will enhance collaboration in developing their electric and smart vehicle strategies.

Discussions between Honda and Nissan commenced in late December, focusing on mutual cooperation to better position themselves against fierce competition from Chinese manufacturers like BYD and US's Tesla. However, significant disagreements arose during the talks, particularly over the proposed merger's operational structure. Honda CEO, Toshihiro Mibe, expressed disappointment over the failed discussions and the potential synergies that could have emerged.

Nissan's CEO, Makoto Uchida, emphasized that the initiative intended to enhance competition but concluded that the arrangement would not realize Nissan’s full potential. Both executives acknowledged that while the merger may have provided a stronger foothold, Nissan plans to pursue independent restructuring efforts moving forward. They clarified that, despite the absence of a merger, a strategic partnership would continue, enabling cooperation on electric and autonomous vehicle projects Forbes.

Additionally, Mitsubishi Motors, which had shown interest in joining the discussions, also terminated its memorandum of understanding regarding the merger structure, focusing instead on its partnerships in the growing electric vehicle sector. Observers noted that Nissan's delayed transition to electrification and recent job cuts had placed them in a precarious position compared to Honda, which has fared better in the current market climate Al Jazeera.

Future collaboration within the automotive sector may involve openness to new partnerships, with Taiwanese tech giant Foxconn hinted as a potential ally. While discussions with Foxconn remain unofficial, the firm’s chairman indicated interest in possibly acquiring a stake in Nissan if collaboration aligns with mutual benefits Business Insider.