On Thursday, February 13th, Japanese automotive giants Nissan and Honda officially ended their merger talks, signaling the failure of the $60 billion deal. However, the two car manufacturers have pledged to continue collaborating in the electric vehicle sector.
Nissan and Honda had sought to join forces to face industry competition. Insider sources revealed that due to increasing disagreements, especially Honda’s proposal for Nissan to become its subsidiary, the negotiations became more complicated.
Japan’s third-largest car manufacturer, Nissan, is facing numerous challenges and has not fully recovered from years of crisis and the turmoil caused by the arrest and resignation of former chairman Carlos Ghosn in 2018.
Christopher Richter, a Japanese automotive analyst at brokerage firm Lyon Securities, stated, “Honda is quite confident and has many factors in their favor, while Nissan is in a difficult situation.”
Nissan’s partner Mitsubishi Motors was also involved in merger discussions and withdrew from the negotiations on Thursday.
In a joint statement, the three companies said, “Looking to the future, the three companies will cooperate within the framework of a strategic partnership with the goal of entering the era of smart and electrified vehicles.”
In addition to the chaotic competition from Chinese electric vehicle manufacturer BYD and others, Japanese car manufacturers are also facing uncertainty in the major market—the United States—regarding tariff prospects.
Due to a decline in car sales, Nissan reported losses in the July-September quarter last year. At that time, CEO Makoto Uchida took a 50% pay cut to be accountable for performance.
Nissan is advancing a restructuring plan announced in November last year, including cutting 9,000 jobs and reducing global production capacity by 20%. The company has not disclosed further details.
Insiders disclosed in December last year that Nissan needs to further reduce production capacity in mainland China, where it operates eight factories through a joint venture with Dongfeng Motor.
As part of operational optimization, Nissan has already halted production at its plant in Changzhou.
Before announcing merger talks in December, Nissan and Honda had already engaged in separate negotiations on technical cooperation, with the potential scope of their collaboration possibly being announced this Thursday.
Last week, sources told Reuters that Nissan is now open to cooperating with new partners, with Taiwan’s Foxconn considered one of the candidate companies.
Foxconn Chairman Young Liu stated on Wednesday that they would consider investing in Nissan, but the main purpose is for collaboration.
After reports first surfaced in the media on December 17th about Honda and Nissan’s merger talks, Nissan’s stock price surged over 60% by the end of December, while Honda’s stock price jumped approximately 26%. Subsequently, the stock price gains for Nissan and Honda reduced to 21% and 11%, respectively.
Currently, Nissan’s market value is about five times that of Honda, approximately 7.5 trillion yen ($486 billion).
(This article was compiled based on reports from Reuters and Associated Press)