Multi-billion dollar Honda-Nissan merger talks collapse

The Japanese car making giants aimed to combine their businesses to compete against Chinese rivals. (Getty Images)

Tokyo, February 13 — Merger talks between Honda and Nissan have collapsed after the firms failed to agree on a multi-billion dollar tie-up deal.

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

Speaking in December, Honda's chief executive Toshihiro Mibe said a deal with Nissan would combat "the rise of Chinese power".

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 the two Japanese car makers had agreed to explore a strategic partnership for electric vehicles (EVs).

"The talks started because we believe that we must build up capabilities to fight them, including the current emerging forces, by 2030. Otherwise we will be beaten", said Mr Mibe at the time.

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.