There will be no merger between Nissan and Honda after the latter wanted to make Nissan a subsidiary.
The two Japanese car brands Nissan and Honda have officially abandoned their plans to merge.
This potential merger would have created the world's third-largest automaker, but after lengthy deliberations and negotiations, the parties have reached an agreement to shelve the project.
This was announced by both parties in a joint press release on Thursday morning Danish time.
Rumors that negotiations had stalled have been rife for some time, and now the two companies have issued a joint press release confirming this. The statement states that they have decided to cancel the memorandum of understanding for a merger that they signed before Christmas.
Nissan and Honda once entered into a letter of intent to explore the possibilities of a merger, which was seen as an attempt to strengthen their position in the electric car market.
Competition in this area is intense, especially from American Tesla and Chinese manufacturers such as BYD. A merger in Japan was seen as a way to increase competitiveness.
According to several Japanese media outlets, however, it was disagreements in the initial negotiations that led to their breakdown.
Honda reportedly proposed that Nissan be incorporated into Honda as a subsidiary, which Nissan was not willing to do.
Nissan is in a difficult financial situation. Last year, the brand's CEO announced that 9,000 employees would be laid off and factories would be closed.
Nevertheless, both companies emphasized in December, when they signed a letter of intent, that the merger should not be seen as a rescue plan for Nissan but more as a mutually beneficial solution.
The latest press release does not provide any details about the reasons why the negotiations have been interrupted.
However, it is confirmed that Honda proposed during the process that they abandon the original plan to form a joint company and instead make Nissan a subsidiary of Honda.
Although the merger plans have been abandoned, the two manufacturers will continue their strategic cooperation in the development of electric cars.
At the same time, there is another actor showing interest in Nissan. It is the Taiwanese electronics manufacturer Foxconn, which recently announced that they are very interested in a collaboration with Nissan.
Foxconn, which produces electronics for Apple, among other things, wants to expand its business to include electric cars, and here they and Nissan have a common interest.
Foxconn Chairman Young Liu said on Wednesday that they are open to buying a stake in Nissan if necessary. Nissan has not yet commented on Foxconn's overtures.
