Not a happy news for the automotive industry as Honda and Nissan have ended merger talks to establish a $60 billion partnership, sending Nissan deeper into uncertainty and exposing it to new challenges related to bankruptcy.
The talks between Japan’s second-biggest automotive company, Honda, and third-largest, Nissa,n were initiated in December but soon faced issues due to growing differences, including the balance of power in the merger. Honda proposed that Nissan should become its subsidiary, which mainly led to the collapse of talks.
Cooperation
The two sides, however, said they would continue with an earlier agreement to cooperate on technology and other areas, which experts believe is crucial, given a looming threat posed by BYD and other Chinese EV companies.
Reasons for Talks’ Collapse
According to international media reports, the reasons for the talks’ collapse include:
- Nissan’s pride and insufficient alarm about its current situation
- Honda’s sudden decision to revise the terms and propose that Nissan become a subsidiary
- Nissan’s insistence on receiving near-equal treatment in talks despite weaker position
- Honda’s pressure on Nissan to make deeper cuts to its workforce and factory capacity
- Honda’s management observed Nissan’s slow decision-making
Moreover, both Honda and Nissan are facing the prospect of tariffs in the United States.
New Investor?
Taiwanese technology giant Foxconn has emerged as a possible investor in Nissan. “If cooperation requires it (purchasing Nissan shares), we will consider it,” Foxconn chairman Young Liu told the media yesterday.
A couple of days earlier, reports suggested that Nissan is already looking to partner with a different company after its failed attempts with Honda. Sources close to the situation claimed Nissan is now focused on teaming up with a tech giant based in the United States, although details remain under wraps for now.
In November 2024, the Financial Times reported that Nissan’s executives believe the company has a limited window of 12 to 14 months to turn things around.
To make matters worse, Nissan recently announced plans to cut 9,000 jobs and reduce its manufacturing capacity by 20%. With these significant changes underway, the company is actively seeking a way forward.
