Honda and Nissan Officially Cancel Merger Plans

After months of negotiations, Honda and Nissan have officially abandoned their proposed merger, marking the end of what could have been a historic consolidation in the global auto industry.

The deal, originally proposed by Honda in late 2024, aimed to create the world’s third-largest automaker by 2026. Honda put forward a $60 billion merger plan, promising to enhance both companies’ competitiveness against the rising dominance of Chinese automakers. However, a range of disagreements—particularly over governance structure and strategic direction—ultimately led to its collapse.

Key Sticking Points in the Merger Talks

Honda and Nissan signed a memorandum of understanding (MOU) on December 23, 2024, outlining plans for a merger. However, from the outset, there were concerns about whether the deal would materialize. Sources close to the negotiations suggested that Nissan’s reluctance, coupled with Honda’s push for greater control, created significant friction.

One of the most contentious issues was Honda’s proposal to transform Nissan into a subsidiary, rather than forming a more equal partnership. Honda initially suggested a structure where both companies would operate under a common parent entity, with Honda appointing the CEO and other key leadership positions based on cross-shareholding ratios outlined in the MOU. However, later discussions saw Honda advocating for a model where it would become the parent company, with Nissan as a subsidiary—an idea that Nissan strongly resisted.

Another major obstacle was Honda’s insistence that Nissan buy back shares held by Renault, its long-time alliance partner. Honda reportedly did not want Renault to have a stake in the merged entity. Meanwhile, Mitsubishi, which was rumored to be a potential third partner in the deal, opted out, preferring to maintain its independence.

Nissan’s Struggles and the Collapse of the Deal

Nissan, once Japan’s second-largest automaker behind Toyota, has faced significant financial struggles in recent years. By November 2024, the company shocked investors by slashing its profit forecast by 70%, citing weak sales in China and the U.S.—the two largest auto markets. In response, Nissan announced a restructuring plan that included cutting 9,000 jobs and reducing global production by 20%, a move some analysts criticized as insufficient.

During the merger discussions, Honda pushed Nissan to implement even deeper restructuring measures, including factory closures, to streamline operations and improve profitability. However, Nissan resisted, further straining negotiations.

In the end, the combination of Nissan’s reluctance to cede control, Honda’s firm stance on governance, and the broader strategic differences between the two companies led to a deadlock.

Future Outlook

With the merger officially off the table, Nissan is now expected to explore alternative strategies, whether by seeking new partnerships or attempting to navigate its challenges independently. Meanwhile, Honda and Nissan have indicated that they remain open to collaboration in specific areas, particularly in electric vehicle (EV) development, but without merging operations.

While this failed merger underscores the challenges of consolidation in Japan’s auto industry, it also signals the increasing urgency for legacy automakers to adapt as they face growing competition from Chinese brands and a rapidly shifting global market.

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Source: Vietnam Insider