Nissan President Makoto Uchida (left) and Honda President Toshihiro Mibe hold a press conference in Tokyo, Japan, last December to announce their merger plans. However, just two months later, on the 13th, the two companies announced that they were halting merger discussions.  (Yonhap News)

 

[Alpha Biz= Kim Jisun] Japan’s second and third-largest automakers, Honda and Nissan, have called off their merger plans. Both companies announced on the 13th that they had held separate board meetings and decided to terminate their merger discussions.


According to reports from Nikkei and other media outlets, Honda and Nissan agreed to withdraw the basic agreement signed in December last year regarding their merger. The key factor leading to the breakdown was a disagreement over the merger structure. The initial plan involved setting up a holding company under which both Honda and Nissan would become subsidiaries.


However, Honda, whose market capitalization is about four times that of Nissan, reportedly demanded large-scale restructuring from Nissan. When Nissan failed to meet these demands, Honda sought to exert control over Nissan as a subsidiary. Nissan's financial struggles exacerbated the situation, with its net profit in the second and third quarters of last year plummeting by 94% compared to the previous year. 

 

 

In response, Nissan laid off 9,000 employees—7% of its workforce—in November and reduced car production in the U.S. by about 25% last month. Nonetheless, Honda pushed for even more drastic restructuring, including factory closures.



Additionally, Honda's financial burden increased recently, impacting its capacity to pursue the merger. Honda had invested approximately $850 million in General Motors' autonomous driving subsidiary, Cruise, to develop a robotaxi business. However, GM recently pulled out of the project, resulting in a loss of Honda’s investment. Honda is also pursuing an electric vehicle joint venture with Sony, reducing its incentive to develop EVs with Nissan.


Although the merger plan has been scrapped, Honda and Nissan emphasized that they will continue cooperation in specific areas such as electric vehicles and software development.

 

 

 

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