Multi-billion dollar merger talks between Honda and Nissan collapse

Honda and Nissan have announced that they are ending talks of a merger, adding that they will continue their partnership on electric vehicles.

The Japanese car makers, along with junior partner Mitsubishi, aimed to combine their businesses to fight back against competition from rival firms, especially in China.

“Going forward, the three companies will collaborate within the framework of a strategic partnership aimed at the era of intelligence and electrified vehicles,” the companies said in a statement on Thursday.

Joining forces would have created a new motor industry giant alongside Toyota, Volkswagen, General Motors and Ford.

It would also have provided Nissan, which for a while was Japan’s second largest car company, with crucial relief following years of slowing sales and turmoil involving its top executives.

In November, Nissan suprised shareholders with plans to lay off thousands of workers to tackle a drop in sales in China and the US.

The growing electric car market has been increasingly dominated by Chinese manufacturers, such as BYD.

This increased competition has left many of the world’s leading car makers struggling to compete.

In March last year, months before they announced the merger plans, Nissan and Honda had agreed to explore a strategic partnership for electric vehicles.

“The talks started because we believe that we must build up capabilities to fight them, including the current emerging forces, by 2030,” Honda’s chief executive Toshihiro Mibe said, in reference to the Chinese competition. “Otherwise we will be beaten.”

Meanwhile, the Taiwanese technology giant Foxconn has emerged as a possible investor in Nissan.

“If cooperation requires it (purchasing Nissan shares), we will consider it,” Foxconn chairman Young Liu told reporters on Wednesday.