Honda, Nissan merger talks collapse over management structure
TOKYO, Feb. 13 Kyodo - Honda Motor Co. and Nissan Motor Co. said Thursday they had scrapped a historic realignment plan to merge into what would have become the world's third-biggest auto group by volume due to disagreements over the management structure.
While Honda proposed making Nissan its subsidiary to speed up decision-making, Nissan, struggling with a sale slump in key markets, tried to stick to their initial plan of forming a holding company to preserve its autonomy.
But Honda and Nissan, Japan's second- and third-largest automakers, will continue their talks to form a strategic partnership in electric vehicles and other fields along with Mitsubishi Motors Corp., Nissan's alliance partner, they said.
The collapse of the negotiations, less than two months after they started, will compel the companies to reassess their survival strategies. Nissan, the only major Japanese automaker projecting a net loss in the current business year, said it will "conduct a strategic review in pursuit of partnership opportunities."
Honda and Nissan said in December that they aimed to finalize negotiations by June 2025 and establish a holding company in 2026 under which both would operate. Mitsubishi had also considered joining the framework.
After considering "various options," they decided to end the talks to "prioritize the speed of decision-making and execution of management measures" in an increasingly volatile market heading into electrification, they said in a statement.
In an online press conference, Honda CEO Toshihiro Mibe said his company had proposed taking control of Nissan, believing that the initially envisioned holding company's board composed of representatives from both sides could have delayed its decision-making especially when it faced difficult issues.
"We expected that (accepting) our proposal would be an extremely tough judgement for Nissan," Mibe said.
Nissan CEO Makoto Uchida said in a separate press conference that his company rejected the idea because "we couldn't be confident if our autonomy would be ensured."
Uchida said Nissan will ramp up efforts to find a business partner while exploring collaboration with Honda and Mitsubishi in certain areas.
"Honestly, it is difficult for our company to survive independently under the current management situation."
Meanwhile, Honda's Mibe denied the possibility of launching a hostile takeover bid for Nissan, saying, "We have never thought about it and have no plan to do so."
The two carmakers aimed to cut costs by sharing the growing financial burden of developing EVs and software to better compete with global rivals like U.S.-based Tesla Inc. and China's BYD Co.
When they revealed their plan to begin merger talks at a press conference in December, Honda said struggling Nissan would need to boost its turnaround efforts as a condition for the deal.
In November, Nissan said it would cut 9,000 jobs worldwide and reduce its global production capacity by 20 percent.
But Nissan's plans failed to convince Honda that the slumping carmaker is on track for a successful turnaround, sources familiar with the matter have said.
Fearing that slow progress in Nissan's revamp could jeopardize the merger's future, Honda sought to become its parent, but the move riled Nissan's board and pushed it toward scrapping the plan, according to sources.
Honda and Nissan initially said they would unveil the details of their tie-up plan by the end of January but pushed it back to mid-February.
Analysts expect Taiwanese electronics giant Foxconn, formally Hon Hai Precision Industry Co., to intensify efforts to acquire a stake in Nissan, given its recent entry into the EV market and past talks with Renault SA about purchasing some of the French automaker's shares in Nissan.
On Wednesday, Hon Hai Chairman Young Liu told reporters in Taiwan that the company's aim is "cooperation" with Nissan, not acquisition.
Nissan's Uchida said his company has not held talks with Hon Hai at management level, adding, "we will discuss various proposals that could lead to growth."
In its quarterly earnings report also released on Thursday, Nissan projected a net loss of 80 billion yen ($519 million) for the year through March due largely to restructuring costs estimated at around 100 billion yen. It would be the company's first red ink in four years.
==Kyodo
