Honda, Nissan explain scrapping of merger plan

Japanese automakers Honda and Nissan announced on Thursday that they have called off talks to merge and form an auto group worth $60 billion.

Nevertheless, they confirmed that their collaboration would continue within the framework of the strategic partnership established in August, which is focused on the future of vehicle intelligence and electrification.

The two auto giants' share prices climbed in Tokyo on Friday, with Nissan shares rising 2.55 percent to 426 yen ($2.79) and Honda shares gaining 2.48 percent to 1,470 yen.

During a news conference on Thursday, Honda President Toshihiro Mibe said they "have also decided to terminate the memorandum of understanding among the three companies, including Mitsubishi Motors".

In December, Honda and Nissan announced that they would begin merger talks, aiming for a final agreement by June this year.

Initially, the two automakers were discussing integration under a holding company structure, but as discussions progressed after the MoU signing, it became clear that the process would require a significant amount of time and effort.

Seeking a faster decision-making process, Honda proposed making Nissan a subsidiary. However, Nissan strongly opposed the proposed change to the integration structure, which differed from the basic agreement.

Nissan President Makoto Uchida explained at another news conference on Thursday: "Under the proposed structure, where Nissan would become a wholly owned subsidiary of Honda, we were uncertain about how much autonomy we could maintain and whether Nissan's full potential could truly be realized."

Nissan reported a significant decline in third-quarter profit on Thursday, attributing the drop to lower unit sales, higher sales incentives, and inflation. The automaker will close three plants, including one in Thailand, Uchida said.