Nissan is reportedly considering withdrawing from merger talks with Honda as disagreements between the two Japanese automakers intensify, according to Reuters. The company’s board members are expected to convene soon to assess the future of the potential partnership.
If abandoned, the deal’s collapse would cast uncertainty over what could have been the world’s third-largest automaker by sales. It also raises concerns about Nissan’s ability to address its ongoing financial and operational hurdles without external collaboration.
The news of the possible breakdown had a positive impact on both companies’ stock prices. On Wednesday, Honda’s shares rose by more than 2%, while Nissan’s climbed 1.6%, even as the broader Nikkei 225 index recorded a slight decline.
Mounting Differences in Merger Talks
Honda and Nissan, Japan’s second- and third-largest automakers, respectively, announced last year that they were exploring a potential merger to strengthen their position against rising competition from China’s BYD and emerging electric vehicle (EV) manufacturers. However, discussions have reportedly become strained due to increasing disagreements.
Nissan’s board is set to review the situation after Honda proposed that Nissan operate as its subsidiary, a move that deviates from the original terms of their discussions, according to sources familiar with the matter.
Honda’s Reservations About Nissan’s Turnaround Strategy
With a market value nearly five times that of Nissan, Honda has raised concerns about its smaller rival’s progress in executing its turnaround strategy, sources noted. Japan’s Asahi Shimbun had earlier reported that the merger was at risk of falling apart due to these concerns.
Nissan has struggled to adapt to the global transition toward electric vehicles, still reeling from the fallout of former Chairman Carlos Ghosn’s arrest in 2018. Additionally, the company faces potential trade disruptions, particularly from proposed US tariffs under former President Donald Trump. Analysts warn that such tariffs could affect Nissan more severely than Honda or Toyota due to its significant reliance on manufacturing operations in Mexico.
Renault’s Position on the Merger
Renault, Nissan’s long-standing alliance partner, had previously expressed openness to a potential deal between Nissan and Honda. The French automaker, which holds a 36% stake in Nissan—including 18.7% through a French trust—has not publicly commented on the latest developments surrounding the merger discussions.
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