$60-billion merger deal between Nissan and Honda called off over key differences: Report

Nissan and Honda ended merger talks on February 13 to create an auto group worth $60 billion. The talks had been complicated by growing differences, in particular by a proposal from Honda that Nissan become a subsidiary, Reuters reported citing sources. 

Honda, Japan’s second-largest carmaker, and Nissan, the third-largest, had announced last year that they were in talks to merge, which would have marked a significant shift in an industry facing competition from China’s BYD and other electric vehicle newcomers. The automakers promised to continue to collaborate on electric vehicles.  

The merger would have created the world’s fourth-biggest by vehicle sales after Toyota, Volkswagen and Hyundai. Nissan’s junior partner Mitsubishi Motors had also been part of the merger discussions. It also bowed out of the talks, the Reuters report added. 

Nissan has faced greater challenges than some other automakers in the transition to electric vehicles, having not fully recovered from the crises following the arrest and removal of former Chairman Carlos Ghosn in 2018. The merger discussions have also coincided with potential tariff disruptions from the United States. Analysts suggest that tariffs against Mexico could impact Nissan more severely than Honda or Toyota. 

In addition to the rapid rise of Chinese electric vehicle makers such as BYD, Japanese automakers are also facing the prospect of tariffs in the United States, another major market. 

Nissan is pushing ahead with a restructuring plan announced in November that includes cutting 9,000 jobs and reducing global capacity by 20%. It has yet to disclose details such as which locations will be affected. 

Nissan’s market capitalisation is now nearly five times smaller than that of Honda, which is about 7.5 trillion yen ($48.6 billion). A decade ago, the pair were both worth around 4.6 trillion yen.