Nissan Motor President Makoto Uchida informed Honda Motor President Toshihiro Mibe during their meeting on Thursday in Tokyo that Nissan is suspending its merger talks with Honda.

Uchida told Mibe that Nissan intends to scrap the memorandum of understanding signed in December regarding their business integration talks but expressed willingness to continue collaborating with Honda in areas such as electric vehicles, Nikkei reported.

The two Japanese automakers had been considering a merger under a holding company structure. However, they were unable to reach an agreement on the valuation of each company within that framework.

Honda has been urging struggling Nissan to strengthen restructuring efforts. Deeming Nissan's efforts inadequate, Honda proposed a different integration approach that would make Nissan a subsidiary — diverging from initial expectations.

Uchida told Mibe that many Nissan board members had expressed their opposition to Honda's proposal to acquire all of Nissan's shares and make it a wholly-owned subsidiary, Japan's public broadcaster NHK reported on Thursday.

Nissan is set to hold a board meeting on Feb 13 to officially decide to scrap the MOU. Meanwhile, Honda has reportedly concluded that a merger would be difficult and is expected to convene its own board meeting soon to determine its response, according to Nikkei.

The automakers initially announced in December 2024 that they would enter merger talks, aiming for a final agreement by June 2025. This deal, if realized, would have formed the world's third-largest automating group.

In August 2024, they had agreed to collaborate on EVs, in-vehicle software, and parts standardization. Despite the merger's collapse, there is still strong internal support within Nissan for continuing the partnership with Honda, Nikkei reported.

On Nov 7, Nissan Motor announced that for the six-months ended Sept 30, 2024, its consolidated net revenue decreased by 79.1 billion yen ($519 million) year-on-year to 5.98 trillion yen, with consolidated operating profit decreasing 303.8 billion yen to 32.9 billion yen.

The company said its profitability was affected by higher selling expenses and inventory optimization efforts, particularly in the United States, along with rising manufacturing costs.

jiangxueqing@chinadaily.com.cn