Nissan and Honda have officially canceled plans to merge into a single automaker, which would have made them the world’s fourth-biggest auto group. The plan was a merger worth around $60 billion, potentially bringing Mitsubishi into the fold, but it all fell apart.
Less than two months ago, the two automakers signed a memorandum of understanding (MOU) as they explored different business routes, but today, we learned they’ve “agreed to terminate” that memorandum, and talks have ceased. Reports suggest that negotiations were strained over disagreements on the balance of power, and sources told Reuters that Honda wanted to make Nissan a subsidiary. However, other merger discussions included Honda establishing a joint holding company, where it would be in charge of appointing the CEO and directors.
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This news comes at a bad time for Nissan, which is in financial trouble and dealing with declining sales, profits, and market share. A merger with Honda would have allowed both brands to strengthen their core business aspects and better compete with Toyota, Tesla, and other Chinese automakers. Now, Nissan faces more uncertainty.
Reports suggest that Foxconn is open to buying a stake in Nissan, but it’ll need more than that to keep things going while remaining competitive. For now, we’ll have to wait and see how things shake out.
Instead of merging into a super-group, Nissan and Honda will move forward with a “strategic partnership” on electric vehicles, intelligence, and other automotive technologies like solid-state battery cells. By canceling the merger, the two can “prioritize speed of decision-making” and move forward in an increasingly competitive yet volatile market.
Source: Nissan
