The highly anticipated merger between Nissan and Honda has hit a roadblock. Initially planned as a full merger, the deal soured when Nissan's troubled financials prompted Honda to propose making Nissan a subsidiary—a suggestion that Nissan found hard to accept. Reports from Reuters reveal that this has caused the dissolution of the talks. Recently, Nissan reported declining financials with a projected loss of 80 billion yen ($522 million) for 2024. Additional threats loom from potential U.S. tariffs, which could further impact Nissan, especially since 27% of its U.S.-sold cars are manufactured in Mexico.
Though the merger is off the table, Nissan and Honda plan to maintain their joint projects. Given the unattractive proposed names "Nissonda" or "Hondissan," perhaps this is a positive turn of events.
The discussions between Japan’s second and third-largest automakers began as a response to the industry's shift toward electrification. Similar to global patterns of consolidation seen with Stellantis and others, an alliance was seen as a viable strategy. Honda, trailing competitors in EV technology, has only recently introduced the Honda Prologue and Acura ZDX SUV based on General Motors' technology. Meanwhile, Nissan, once a pioneer with its Leaf EV, struggled with outdated tech, although it recently launched the more advanced Ariya SUV.
Earlier, Nissan and Honda signed a Memorandum of Understanding to focus on EV collaboration—though the talks of a full merger have faltered. The complexity of a full union is compounded by Nissan's ties with Mitsubishi and French automaker Renault.
In a late-December announcement, Nissan, Honda, and Mitsubishi revealed intentions to form a new company by mid-2025, with Mitsubishi potentially joining. The initiative relies heavily on Nissan’s financial recovery and Honda’s strategic moves, including a significant share repurchase to stabilize its market position. The proposed venture aims to embrace electrification and compete against rising EV brands, especially from China. While a new name for the entity remains undecided, Honda’s leadership in this merger reflects its stronger market position, though roles may shift as the entity matures.
The lineup changes remain uncertain, but some overlap is expected to offer synergy between brands. Efforts to retain existing partnerships, like Nissan-Renault and Honda-GM, are considered strategic assets. Renault continues to maintain a significant stake in Nissan, open to future strategic options.
The ambitious merger between Nissan and Honda has come to a standstill, with Nissan unwilling to become a subsidiary. Despite this, they will continue to partner on EV projects. Both companies aim to capitalize on future electrification, possibly integrating Mitsubishi. The industry waits to see how this partnership evolves in light of existing alliances and market challenges.
