Honda and Nissan made it official on Thursday: their proposed merger, which would have formed a $58 billion automotive powerhouse, is no longer moving forward. Announced last December, the deal aimed to bolster their position against emerging Chinese brands. Mitsubishi had been slated as a junior partner, but it also opted to withdraw from the agreement on the same day.
Although the merger has been scrapped, both companies are pushing forward with a partnership focused on electrification and software. This collaboration, which was outlined earlier this year, replaces the original merger plan. Honda had suggested restructuring the deal to give it parent company status while positioning Nissan as a subsidiary through a share exchange.
On February 5, Japan’s Asahi Shimbun reported that Honda had grown frustrated with Nissan’s slow progress, particularly regarding its restructuring efforts. This dissatisfaction reportedly led Honda to propose the restructured deal. Nissan’s financial struggles, with a market capitalization far smaller than Honda’s, played a significant role in complicating discussions.
Given the current market instability and the push toward electrification, both automakers determined that ending the merger was the best path forward. Nissan, in particular, was seen as needing the merger to reverse years of declining sales and executive issues. Nissan also provided updates on its restructuring plan, which was first introduced last fall.
In a move to address its challenges, Nissan plans a 20% reduction in global production, lowering its capacity from five million to four million units by 2026. A workforce reduction of approximately 6,500 employees is also expected, translating to estimated cost savings of 400 billion yen ($2.6 billion). Plants in Smyrna, Tennessee, and Canton, Mississippi, will be among those impacted.
Nissan is actively exploring new strategic alliances, including talks with Taiwanese manufacturer Foxconn, which may acquire shares in the automaker. In a similar vein, Nissan is said to be discussing potential collaborations with a tech company, echoing Honda’s partnership with Sony to develop their Afeela electric vehicle brand.
