Negotiations for a multi-billion-dollar merger between Japanese automakers Honda and Nissan have collapsed after the companies failed to agree on key terms.
The proposed merger, which also involved Mitsubishi, aimed to create a $60 billion (£48bn) automotive giant, making it the world’s fourth-largest car manufacturer after Toyota, Volkswagen, and Hyundai. The deal was intended to strengthen their market position, particularly against increasing competition from Chinese automakers.
Despite the failed merger, Honda and Nissan will continue collaborating on electric vehicle development.
Merger Breakdown and Key Challenges
Industry analyst Karl Brauer of iSeeCars.com noted that the collapse was not entirely unexpected. “Plenty of automotive mergers have failed, and this one had as much risk as it did potential benefits,” he said.
For Nissan, the merger was seen as a much-needed opportunity to stabilize after years of declining sales and leadership turmoil, exacerbated by the 2018 arrest of former CEO Carlos Ghosn over financial misconduct allegations. Ghosn, who denies the charges, later fled Japan to Lebanon.
Honda, in a stronger financial position, led the negotiations but insisted that Nissan complete its internal restructuring before any deal. Disagreements arose over Nissan’s role in the merger, with conflicting views on whether it would be an equal partner or a subsidiary.
Jesper Koll of Monex Group highlighted the challenge of balancing power in such a deal. “The pressure to make it appear as a merger of equals in Japan is very strong,” he said. “Having one side take the lead would seem almost offensive to the other.”
Future Outlook
With the merger off the table, Nissan continues to face uncertainty. A potential new investor, Taiwanese electronics giant Foxconn, has expressed interest in acquiring Nissan shares for a possible partnership. Foxconn chairman Young Liu mentioned the company’s willingness to collaborate with Renault, which holds a 36% stake in Nissan.
Renault weighed in on the failed merger, stating that the proposed terms were “unacceptable.”
Both Honda and Nissan must now navigate increasing competition in the electric vehicle market, particularly from Chinese manufacturers like BYD. Honda’s CEO, Toshihiro Mibe, previously emphasized the urgency of strengthening their position against rising competitors, warning, “By 2030, if we don’t build up our capabilities, we will be beaten.”
