Merger discussions between Japanese automakers Honda and Nissan have fallen apart after the companies failed to reach an agreement on the terms of a $60 billion tie-up. The proposed deal, which also involved junior partner Mitsubishi, was aimed at bolstering their competitiveness in an auto industry increasingly dominated by Chinese manufacturers.
Despite the breakdown of talks, both firms have confirmed that they will continue working together on electric vehicles (EVs), a segment where competition from firms like BYD has intensified.
Disagreements Over Nissan’s Role
The collapse of the deal was not entirely unexpected, according to automotive analyst Karl Brauer, who noted that many auto industry mergers have failed due to differences in corporate culture, strategic priorities, and leadership structures.
A key sticking point in the negotiations was Nissan’s role in the new entity. While Honda entered the talks from a position of relative financial strength, Nissan was seeking a merger as part of a broader turnaround strategy following years of declining sales and leadership turmoil.
Toshihiro Mibe, Honda’s chief executive, had previously stated that any merger would be “based on the assumption that Nissan completes its turnaround action.” However, the companies ultimately disagreed on whether Nissan would be an equal partner or a subsidiary, leading to the collapse of the negotiations.
Jesper Koll, an analyst at Monex Group, said that the Japanese corporate culture strongly favors mergers of equals, making it difficult for one company to take clear leadership. He also noted that Honda risked being burdened with Nissan’s ongoing struggles, adding:
“You’re taking a potentially great company and taxing it with having to bail out an ugly duckling.”
Nissan’s Leadership Crisis and Financial Struggles
Nissan has been battling a prolonged crisis since the 2018 arrest of former CEO Carlos Ghosn on financial misconduct charges. Ghosn, who denies the allegations, fled Japan in 2019 and remains a fugitive in Lebanon.
In the wake of the scandal, Nissan has struggled to regain momentum. The company announced a cost-cutting plan last year, including 9,000 job cuts worldwide and a pay reduction for its CEO.
With the Honda merger now off the table, Nissan faces an uncertain future as it continues to navigate financial pressures and declining market share.
Foxconn and Renault Eye Possible Moves
While the Honda deal has collapsed, potential alternatives are emerging. Taiwanese tech giant Foxconn, best known for producing Apple’s iPhones, has expressed interest in buying Nissan shares to explore a strategic partnership in EV production.
At the same time, Renault, which holds a 36% stake in Nissan, reacted strongly to the failed merger discussions, calling the proposed terms “unacceptable.” Renault has played a crucial role in Nissan’s past, having rescued the company from near bankruptcy in 1999.
The Road Ahead
As the global auto industry shifts toward electric vehicles, Honda and Nissan both face growing pressure to keep pace with Chinese manufacturers and navigate potential U.S. tariffs.
Nissan’s next move will be closely watched, with analysts emphasizing the need for strong leadership and clear strategic direction to overcome its current challenges. Whether through a new investor, a different merger, or internal restructuring, the company now faces a critical period in its long-term survival strategy.
