In a stunning development that could reshape the global automotive landscape, Toyota Motor Corporation has reportedly reached out to rival Nissan following the collapse of Nissan's highly anticipated merger with Honda earlier this year.

This unexpected overture signals a potential seismic shift in the industry as Japan's largest automaker extends a lifeline to its troubled counterpart.

According to reports from Japan's Mainichi newspaper, a Toyota executive made contact with Nissan in February 2025, immediately after Nissan's negotiations with Honda officially ended. The timing couldn't be more critical for Nissan, which currently faces mounting financial pressures and dwindling market share.


The Failed Honda Nissan Dream

The automotive world watched closely as Nissan and Honda announced merger talks in December 2024, with plans to establish a holding company by 2026. This proposed $60 billion deal would have created the world's third-largest automaker, trailing only Toyota and Volkswagen. However, the negotiations crumbled spectacularly in February 2025.

"The merger failed because Honda changed its mind about establishing a joint venture with Nissan and demanded that it become a subsidiary," reported Japan News, highlighting the fundamental disagreement that torpedoed the deal. 

Nissan's leadership flatly rejected the notion of becoming a Honda subsidiary, despite Honda's market value being nearly five times that of Nissan. This clash of corporate cultures and unwillingness to compromise ultimately doomed what could have been a transformative partnership.


Nissan's Deepening Crisis

Nissan's rejection of Honda's terms comes amid a perfect storm of challenges for the automaker. Recent financial reports paint a grim picture:

  • A staggering $4.5 billion loss reported in May 2025
  • Global sales decline of 42% since fiscal 2017
  • Negative free cash flow in fiscal 2024
  • Operating margins shrinking from 4.5% to less than 1%
  • Plans to close 7 manufacturing plants worldwide
  • Layoffs affecting 15% of its global workforce

In a desperate bid to stay afloat, Nissan is reportedly planning $7 billion in asset sales and loans, including selling its global headquarters for $700 million. The company has already announced it's halting merit raises and cutting vehicle development programs. 

"Nissan may have found a potential lifeline in Toyota as it battles mounting debt, declining sales, and a failed merger attempt with Honda," reports CBT News, underscoring the dire straits in which Nissan finds itself. 


Toyota's Position of Strength

In stark contrast to Nissan's struggles, Toyota continues to dominate the global automotive market. The company reported:

  • Record sales revenue of 48 trillion yen ($314 billion) in fiscal 2025, up 6.5%
  • Net profit of 4.765 trillion yen in fiscal 2025
  • Projections of 10.4 million vehicle sales for the coming year, an increase of 1.2%
  • Strong cash reserves and operational efficiency
  • Consistent global market leadership

While Toyota is projecting a 34.9% drop in net profit for the coming fiscal year due to U.S. tariff concerns, the company remains in an enviable financial position compared to most competitors. This strength gives Toyota considerable leverage in any potential merger discussions.


What Toyota Sees in Nissan

Despite Nissan's troubles, the company still possesses valuable assets that would be attractive to Toyota:

  1. Global Manufacturing Infrastructure: Despite recent cutbacks, Nissan maintains significant production capacity in key markets.
  2. Electric Vehicle Technology: Nissan was an early pioneer in mass-market EVs with the Leaf and possesses valuable intellectual property.
  3. Strong Brand Recognition: The Nissan brand remains well-established in North America, Europe, and parts of Asia.
  4. Premium Market Presence: The Infiniti luxury division could complement Toyota's Lexus brand.
  5. Market Share Consolidation: Absorbing Nissan would instantly boost Toyota's global market position and eliminate a competitor.


The Potential Impact of a Toyota Nissan Merger

If Toyota and Nissan were to merge, the implications would be far-reaching:

Industry Consolidation

A Toyota Nissan combination would create an automotive behemoth with unparalleled scale, especially in Japan where it would control approximately 50% of the domestic market. This could trigger additional mergers as competitors seek to match this scale.

EV Development Acceleration

Toyota, often criticized for its slow adoption of battery electric vehicles, could leverage Nissan's experience to accelerate its EV transition. The combined research and development resources would be formidable.

Supply Chain Optimization

The merged entity could wield enormous purchasing power, driving down component costs and potentially reshaping supplier relationships throughout the industry.

Market Rationalization

Consolidating overlapping product lines could help address overcapacity issues plaguing the global automotive industry, particularly in segments where both companies compete directly.

Regulatory Challenges

Any merger would face intense scrutiny from competition authorities worldwide. The combined market share in Japan would be especially problematic from an antitrust perspective.


Will It Happen?

While Toyota's overture to Nissan represents a logical business move, significant hurdles remain:

"Nissan will tremendously benefit from Toyota's partnership, but its management at Nissan and their stubbornness that's going to be the challenge," noted one industry observer on Reddit, highlighting the cultural and organizational barriers. 

Nissan's insistence on maintaining independence, the very stance that derailed its Honda merger could similarly complicate negotiations with Toyota. Additionally, Toyota's dominant position means any deal would likely resemble an acquisition rather than a merger of equals.

Nevertheless, Nissan's worsening financial position may ultimately force pragmatism. As one analyst put it, "When you're drowning, you don't question the credentials of your rescuer."

The coming months will reveal whether Toyota's courtship of Nissan blooms into a full merger or remains a fleeting exploration. Whatever the outcome, this development signals Japanese automakers' recognition that consolidation may be necessary to compete in an increasingly challenging global market dominated by Chinese EVs and well-capitalized Western competitors.

The question now isn't whether Japan's auto industry will consolidate, but how and when, and Toyota appears determined to lead that transformation.