What next for Honda and Nissan?

Honda and Nissan on Thursday announced the scrapping of merger talks that would have created the world’s third-biggest auto company by unit sales behind Toyota and Volkswagen.

Honda and Nissan on Thursday announced the scrapping of merger talks that would have created the world's third-biggest auto company by unit sales behind Toyota and Volkswagen.

Here are some key points about why the Japanese companies explored a tie-up, the reasons for their failure, and where this leaves them in a difficult global auto industry.

Honda was founded in 1948 as a small factory making motorcycles and is now the world's biggest producer of the two-wheelers. It also makes 3.7 million four-wheel vehicles annually.

More than 40 percent of these were sold in North America last year, roughly 20% in China, 18% in Japan and three percent in Europe.

Nissan, founded in 1933, produced 3.1 million cars last year. North America accounts for 38% of its global sales, China 20%, Japan 14% and Europe 10%.

French automaker Renault took a 36.8% stake in the then loss-making firm in 1999 and Mitsubishi Motors joined the alliance 17 years later, with Nissan taking a 34% stake in its struggling Japanese rival.

But tensions emerged, stoked by the French state increasing its stake in Renault in 2015, followed by the 2018 arrest of Nissan boss Carlos Ghosn in Japan on suspicion of financial misconduct and his subsequent flight from the country.