Japanese auto giants Honda and Nissan confirmed on Thursday they had scrapped the merger talks that would have created the world’s third-largest automaker by unit sales.
AFP reports that the bid to join forces had been seen as a bid to catch up with US titan Tesla and Chinese firms in the electric vehicle market, as well as providing a lifeline to struggling Nissan.
The firms said in a joint statement that they “agreed to terminate the MOU (memorandum of understanding) signed on December 23 last year for consideration of a business integration between the two companies”.
That the both companies were not able to reach an agreement is very regrettable,” Honda’s CEO and president Toshihiro Mibe told reporters.
Mibe insisted in December that any merger would not be a bailout for Nissan, which announced last year thousands of job cuts after reporting a 93 percent plunge in first-half net profit
Further illustrating its problems, Nissan said on Thursday that it was now expecting an annual loss of $518 million owing to slumping sales.
Japanese media reports have said the discussions unravelled after Honda proposed making its struggling rival a subsidiary instead of the plan, announced in December, to integrate under a new holding company.
The automakers confirmed in the joint statement that Honda “proposed changing the structure from establishing a joint holding company… to a structure where Honda would be the parent company and Nissan the subsidiary through a share exchange”. Under a joint board, “the decision-making speed may slow when a tough decision is required,” Mibe said.