Japanese government pushed Nissan-Honda merger, reports claim

The Japanese government tried to push Nissan and Honda into merger talks because it feared the Nissan-Renault-Mitsubishi Alliance could collapse and leave Nissan "exposed", according to the Financial Times.

Top Japanese officials attempted to broker discussions about a merger at the end of last year because they were worried about the deteriorating state of Nissan's relationship with Renault, the newspaper claims.

Advisers to Japanese prime minister Shinzo Abe are reported to have feared that this relationship had "soured so badly" that it could break down altogether and leave Nissan in a vulnerable position. A tie-up with Honda was suggested to strengthen the brand.

However, the merger talks failed almost instantly, with both Nissan and Honda rejecting the idea before the pandemic forced both to focus their attention elsewhere.

Nissan, Honda and the Japanese prime minister's office all declined to comment on the report.

While the reason the talks failed is unconfirmed, it's likely because Honda's unique engineering makes it tricky for it to share parts and platforms with Nissan, meaning a Nissan-Honda merger would miss out on vital economies of scale.

A further obstacle to a successful union is that the two brands also have very different business models. Nissan's core business focuses on cars, while Honda's diversity means markets such as motorcycles, power tools and gardening equipment play a big role in the overall business.

However, more and more car makers have joined forces in recent years as they attempt to consolidate their positions in a worsening global market. Last year, the PSA Group and Fiat Chrysler Automobiles confirmed a merger that will create the world's fourth-biggest car maker, called Stellantis.

More recently, Ford and Volkswagen finalised a wide-ranging global alliance that will involve the two firms working together on electric cars, pick-up trucks, vans and autonomous technology.