Nissan is due to step back from talks with Honda, which would have seen the two huge Japanese car companies merge in a £48 billion deal.

Talks between the two brands began in a bid to give Nissan more financial support after it ended an alliance with Renault Group and Mitsubishi, which began in 1999, with some sources warning in November that the Japanese brand would have just 14 months to survive without a partner.

However, Christopher Richter, Japanese automotive analyst at the brokerage CLSA, noted that Nissan and Honda could have had disagreements over control.

He explained: “The news saying that Nissan did not want to be a Honda subsidiary appears to highlight that control was a contentious issue.

“Without being able to have control, Honda appears to be walking away.”

In late 2024, Nissan announced it was looking for a new partnership deal after Renault reduced its capital in the alliance – with the Japanese brand beginning talks with the domestic rival Honda.

If the merger were to go ahead, Nissan and Honda’s new alliance would have created the third-largest car manufacturer in the world and helped both companies have a stronger chance of competing against the growing number of Chinese car brands in export markets.

However, an unnamed source reported that Honda proposed to turn Nissan into a subsidiary company. As a result, it is believed Makoto Uchida, Nissan’s CEO, met with Toshihiro Mibe, Honda’s CEO, to request that talks between the two companies cease.

Given the sensitivity of the subject, Honda has released a statement, insisting there are no plans to end discussions between the two companies.

It continued: “We are still in discussions, and we’ll provide more details at the appropriate time.”

Nissan issued a similar statement, reiterating that the talks between the two brands will continue and announcing that a final decision is due to be made by mid-February.

In light of the talks breaking down, it is expected that Nissan is once again looking for new partnerships, with one insider suggesting that the Japanese brand is open to working with Foxconn.

The Taiwanese manufacturer is the world’s largest producer of contract electronics, producing Apple products, including the iPhone.

If Nissan and Foxconn agree to a merger, the tech company could help to develop fully-electric models, such as future generations of the Leaf hatchback.