Japanese Carmakers Struggle to Find Common Ground After Merger Collapse

A year after Honda, Nissan and Mitsubishi dramatically scrapped their proposed mega-merger, the three Japanese manufacturers remain locked in discussions — but tangible progress is still proving elusive.

All three continue to explore selective partnerships in areas such as software, electrified drivetrains and product sharing, yet overlapping operations and diverging strategic priorities have slowed momentum.

The original plan, announced in late 2024, envisioned a holding company that would have created one of the world’s largest automotive groups. However, negotiations unravelled when Honda pushed to take full control of Nissan, shifting talks from an equal merger towards a subsidiary model in a move Nissan rejected. The agreement was formally abandoned in February 2025, with each firm citing irreconcilable differences and misaligned expectations.

Despite the breakdown, the companies have maintained dialogue on targeted collaboration. They continue to examine joint opportunities in North America, where tariffs and rising development costs weigh heavily on profitability. Nissan CEO Ivan Espinosa has described the ongoing discussions as “constructive”, while signalling that Nissan is simultaneously considering partnerships beyond Honda.

Some cooperation is already in play: Nissan sells a rebadged Mitsubishi Outlander plug-in hybrid in the United States, and plans are under way for Mitsubishi to receive a version of Nissan’s Leaf EV. Potential joint investment in a North American SUV is also under review, though no firm commitments have been set.

Yet analysts note that all three carmakers face similar structural challenges — declining profits, pressure from China’s fast-advancing EV sector and limited differentiation in model portfolios. These shared weaknesses raise questions about whether collaboration between them can generate meaningful synergies. Several industry observers argue that partnerships with technology firms may ultimately offer greater strategic value.

For now, each automaker is prioritising internal recovery. Honda is undertaking a major review of its vehicle strategy following heavy EV-related losses, while Nissan is deep into a restructuring programme involving plant closures, job cuts and cost reductions. Both insist that while cooperation remains desirable, long-term stability must be secured independently.

Although the once-ambitious merger is firmly off the table, the evolving landscape ensures that collaboration, in some form, remains an ongoing consideration for Japan’s automotive giants.