Nissan tells Honda it intends to end merger talks: source
TOKYO, Feb. 6 Kyodo - Nissan Motor Co. conveyed its intent to terminate merger talks with Honda Motor Co. when the management of the two companies met Thursday, a source familiar with the matter said, signaling the end of an initiative that could have created the world's third biggest auto group by volume.
Honda, Japan's second-largest automaker, will however continue to explore some form of collaboration with Nissan, the third largest, over the development of software and batteries for electric vehicles in the face of powerful EV manufactures in the United States and China.
Nissan CEO Makoto Uchida visited Honda headquarters in Tokyo in the morning to hold talks with CEO Toshihiro Mibe on Nissan's decision to pull back from the deal announced in December that would have seen the two companies merge under a holding company.
Nissan decided at a board meeting Wednesday to scrap the negotiations, after Honda floated the idea of Nissan becoming its subsidiary, a proposal that caused vehement opposition inside Nissan according to other sources.
Honda has grown impatient with what it views as Nissan's slow progress in turning around its business -- a condition Honda has set to realize the merger -- and sought tighter control in management by making Nissan its unit, they said.
Struggling Nissan has said it will cut 9,000 jobs worldwide and reduce its global production capacity by 20 percent after reporting a more than 90 percent drop in net profit in the April-September period. But it has not come up with a detailed restructuring plan that convinces Honda, according to the sources.
The envisaged business integration would have allowed the two companies to reduce costs and share the growing financial burden of developing EVs and software to compete with global rivals like Tesla Inc. and China's BYD Co.
Honda and Nissan plan to make an announcement on the fate of the merger plan later in the month.
Honda hopes to continue discussions with Nissan on a possible collaboration in the areas of software development and battery charging services for EVs, a source close to the company said. The two companies agreed in March last year to start a feasibility study for such a strategic partnership.
Mitsubishi Motors Corp., Nissan's alliance partner, meanwhile, was reluctant to join the Nissan-Honda merger in the first place, a senior official said.
The official said the company will focus on strengthening cooperation with the two larger firms over EVs and other areas.
==Kyodo
