Honda, Nissan and Mitsubishi have formally ended talks over a ‘mega-merger’ that would have helped fight off “emerging forces” from China.

The deal would have created the third-largest global carmaker by sales volume

The Japanese carmakers signed a memorandum of understanding (MOU) in December on a tripartite collaboration but talks stalled after growing differences.

The deal would have created the third-largest global carmaker by sales volume while fighting off rising threats from Chinese OEMs.

Building on the carmakers’ existing collaboration, talks on a “business integration” initially explored setting up a joint holding company that would advance work on electric and autonomous vehicles in a market increasingly dominated by Chinese firms.

But the alliance hit the rocks on the back of Honda’s proposal to instead make Nissan a subsidiary.

An official statement issued by the three OEMs confirmed they have agreed to “terminate” the MOU, but said they would continue to “collaborate within the framework of a strategic partnership aimed at the era of intelligence and electrified vehicles”.

The trio signed an MOU on 1 August 2024 around joint discussions on a framework to accelerate initiatives in areas such as environmental technologies, electrification technologies and software development.

The merger was seen as critical for Nissan, which has been hit by a slowdown in sales and turmoil after former chairman Carlos Ghosn was arrested in late 2018 on charges of fraud and misuse of company assets.

Latest quarterly results posted by Nissan show a steep drop in profits and the carmaker has now revised its full-year outlook for fiscal year 2024 down again. This follows cost-cutting measures announced in November including a 20% drop in global production capacity and a 9,0000 reduction in its global workforce.

Taiwanese electronics giant Foxconn confirmed its interest in Nissan yesterday. The iPhone maker, which is looking to expand into electric vehicles, reportedly asked Renault to sell its 35% stake in Nissan in December and has now said talks have reopened.