Nissan and Honda have officially scrapped their merger talks, which would have created the world’s third largest automotive company.
Both companies announced in a joint statement issued on Thursday that they had agreed to terminate the memorandum of understanding (MOU) that had been signed on December 23, 2024, with a view to establishing a roadmap to integrate their businesses by establishing a joint holding company.
However, problems later emerged when Honda proposed changing the composition of the merger to a structure where Honda would be the parent company and Nissan the subsidiary through a share exchange.
"That both companies were not able to reach an agreement is very regrettable," Honda CEO Toshihiro Mibe told media representatives on Thursday. He had expressed concern that a joint board might have slowed down decision making, particularly when tough decisions were required.
Mibe had also insisted that the proposed merger would not constitute a bailout for Nissan, AFP reported.
The embattled Japanese carmaker announced plans in late 2024 to cut its global production capacity by 20% and lay off 9,000 staff members in a bid to mitigate its downturn in sales and profits. This came after Nissan’s net profit in the first half of 2024 plunged by 93 percent.
However, all is not lost as Honda, Nissan and Mitsubishi Motors would still continue to seek synergies through a strategic partnership announced in August 2024.
Nissan’s current Alliance partner Renault, which owns a 35% stake in the Japanese carmaker, said it welcomed the cancellation of the merger talks as this would allow Nissan to focus “first and foremost” on the execution of its turnaround plan, AFP reported.
The Honda-Nissan Merger, which would also in theory have included Mitsubishi, was intended to create a Japanese automotive powerhouse in the face of rising competition from Chinese carmakers, particularly in the electric car field, where BYD is currently giving Tesla a run for its money in international markets.
It would have allowed them to scale development costs associated with developing electric vehicles and their batteries.
However, Nissan’s far weaker financial position ultimately meant the balance of power in any form of partnership would have been skewed heavily in favour of Honda. A marriage of equals it would never have been.
IOL