Nissan-Honda merger on the brink as growing disagreements threaten deal

Nissan's board is set to review its merger talks with Honda amid rising disagreements, putting the potential tie-up in jeopardy as both automakers struggle to find common ground

Nissan is considering ending its merger discussions with Honda, news agency Reuters reported. The company's board members are expected to meet soon to deliberate on the next steps regarding the potential partnership.  

 

If called off, the decision would cast doubt on a deal that could have formed the world's third-largest automaker by sales. It also raises concerns about Nissan’s ability to navigate its ongoing financial and operational challenges without external support.  

 

News of the possible breakdown in talks had a positive impact on both companies' stock prices. On Wednesday, Honda’s shares rose over 2 per cent, while Nissan’s gained 1.6  per cent , contrasting with a slight dip in the broader Nikkei 225 index.  

 

Merger talks faced growing differences  

Honda and Nissan, Japan's second- and third-largest automakers, respectively, announced last year that they were exploring a merger amid intensifying competition from China's BYD and emerging electric vehicle manufacturers. However, discussions have reportedly been strained by increasing disagreements, the news report said.

 

Nissan’s board is now set to review the situation following Honda’s suggestion that Nissan operate as its subsidiary — a move that deviates from the initial terms of their discussions, one source revealed.  

Honda’s concerns over Nissan’s turnaround  

With a market value nearly five times greater than Nissan’s, Honda has expressed concerns about its smaller rival’s progress in executing its turnaround strategy, a source noted.  

 

Earlier, Japan's Asahi Shimbun reported that the merger was at risk of falling apart.  

 

Nissan has faced significant challenges in adapting to the shift toward electric vehicles, struggling to recover from years of turmoil following the arrest of former Chairman Carlos Ghosn in 2018.  

 

Compounding these difficulties, the company also faces potential trade disruptions, particularly from proposed US tariffs under former President Donald Trump. Analysts believe such tariffs could impact Nissan more severely than Honda or Toyota, given its reliance on production in Mexico.  

Renault's stance on the merger  

Renault, Nissan’s long-time alliance partner, had previously indicated openness to a potential deal with Honda. The French automaker holds a 36 per cent stake in Nissan, including 18.7 per cent through a French trust.