Nissan backs out of its planned merger with Honda, claimed sources close to the issue. The two Japanese auto giants initially signed a memorandum of understanding (MOU) last year and agreed to merge by the year 2026.
TALKS AND RUMOURS
Honda officially published news of a “business integration” with Nissan in December 2024, following the latter’s declining performance over the last year. Initially highly anticipated by the automotive industry, talks between both companies are now falling apart, sources from Nikkei Asia claim.
According to anonymous sources from both companies, Nissan and Honda have reached a stalemate over the merger agreement. It is rumoured that Honda is calling for Nissan to reacquire its 35 per cent stake in Renault, worth an estimated 5.5 billion AUD. With falling sales and mass layoffs on Nissan’s end, this request may be too much for the company to fulfil.
Other rumours claim Honda initially proposed an acquisition of Nissan instead of a merger. The latter initially rebuffed reports from Reuters that claimed that Nissan was to become a subsidiary of Honda instead. Nissan stood firm that the partnership would be built on equal ground, rather than Honda taking the reins.
NISSAN BACKS OUT
Just last February 6, Makoto Uchida, Nissan’s Chief Executive Officer (CEO) officially terminated talks of the merger with Honda CEO Toshihiro Mibe. This move from Uchida followed reports of Honda’s proposal of an acquisition, rather than a merger, and many more differences that have complicated talks between the two companies.
According to Christopher Richter, a Japanese auto analyst, the subsidiary-merger disagreement could be a “control issue” for Honda. “The news saying that Nissan did not want to be a Honda subsidiary appears to highlight that control was a contentious issue,” he said. “Without being able to have control, Honda appears to be walking away.”
Nissan will finalise its withdrawal after a board meeting, relinquishing earlier ambitions to create “the world’s third-largest automaker” with Honda. Prior to this, fellow Japanese auto giant Mitsubishi Motors also backed out of plans to join the merger.
The Wallstreet Journal reported that Nissan may opt to continue its other plans with Honda, such as advancements in electric vehicles (EV) and software. Nissan may end up compromised should the merger and other projects completely fall through, especially after losing traction in the US and China markets.
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