Japanese automakers Honda and Nissan have officially terminated their merger discussions, which aimed to create a $60 billion entity positioned as the world’s fourth-largest car manufacturer. The negotiations, initiated in late December 2024, encountered insurmountable challenges, primarily due to disagreements over the proposed corporate structure. Honda’s proposition to make Nissan a subsidiary was a pivotal factor leading to the dissolution of the talks.
The intended merger sought to bolster the companies’ competitiveness against rapidly ascending Chinese electric vehicle (EV) manufacturers. Despite the cessation of merger discussions, both Honda and Nissan have expressed intentions to continue collaborating on technology and other strategic areas.
Nissan, in particular, faces significant challenges, having struggled to recover from a series of crises and management upheavals following the 2018 arrest and subsequent ousting of former chairman Carlos Ghosn. The company has reported a substantial 78% decline in third-quarter operating profit, amounting to 31.1 billion yen ($201.84 million), and has revised its annual operating profit forecast downward for the third time, now anticipating a 20% reduction to 120 billion yen for the current financial year.
In response to these financial difficulties, Nissan has announced a comprehensive restructuring plan, which includes reducing costs by ¥400 billion ($2.5 billion) in the 2026 fiscal year. This plan entails cutting 6,500 jobs at factories in the U.S. and Thailand, as well as a 20% reduction in senior management roles. The company has also revised its full-year forecast, now expecting a loss of ¥80 billion.
The collapse of the merger talks underscores the complexities inherent in large-scale automotive consolidations, especially when cultural differences and strategic disagreements come into play. As the industry continues to evolve, particularly with the rise of EVs, both Honda and Nissan will need to navigate these challenges independently, seeking alternative strategies to remain competitive in a rapidly changing market.
References:
- Honda rules out hostile bid for Nissan after merger talks collapse. Financial Times.
- Nissan posts 78% Q3 profit drop, cuts annual forecast for third time. Reuters.