Nissan Motor will suspend merger talks with Honda Motor, as the two Japanese automakers have been unable to agree on key stipulations, such as the integration ratio, Nikkei reported on Wednesday.

Nissan will withdraw the memorandum of understanding signed in December regarding the business integration negotiations. Honda had proposed making Nissan its subsidiary, a significant change from their original plan to merge under a holding company, but this was rejected due to strong internal opposition within Nissan. The companies will consider whether to resume merger discussions or continue their collaboration on electric vehicles and other projects in the future, according to Nikkei.

In December 2024, Nissan and Honda announced they had agreed to begin talks on a merger under a holding company in 2026 while preserving their respective brands.

If successful, the merger would create the world’s third-largest automaker by sales. The holding company was expected to be listed on the Tokyo Stock Exchange’s Prime Market by August 2026, said Honda Motor CEO Toshihiro Mibe at a news conference on Dec 23. The companies aimed to finalize a formal agreement by June 2025.

As part of the merger discussions, Honda required Nissan to present a recovery plan due to its underperformance. While Nissan worked on this plan, delays occurred due to strong resistance to restructuring in various regions. Honda, concluding that Nissan’s recovery would take longer, proposed making Nissan a subsidiary to lead the restructuring under Honda’s direction.

However, this suggestion met significant resistance within Nissan, as it was seeking a more equal partnership. These differences between the two companies led to the suspension of talks, Nikkei reported.

Following the news report, Nissan’s shares dropped by more than 4 percent before trading was halted by the Tokyo Stock Exchange. Honda’s shares, on the other hand, continued to trade and ended the day up more than 8 percent.

[email protected]