The merger discussions between Honda Motor Co. and Nissan Motor Co. have officially collapsed, with tensions running high over the conditions proposed by Honda. A senior Nissan official expressed strong discontent over what he described as “rude” demands made by Honda during the negotiations.
At the core of the disagreement was Honda’s insistence that Nissan become its subsidiary, a condition that ultimately led to the breakdown of the talks. Honda also pushed Nissan to restructure its business and abandon its proprietary hybrid vehicle (HV) system, e-Power, in favour of Honda’s own HV technology. These proposals were perceived as an affront to Nissan’s reputation, particularly given its historical branding as the “Nissan of technology.”
From Honda’s perspective, integrating Nissan’s sales channels with its hybrid system would have improved economies of scale, potentially lowering procurement costs for both companies. However, Nissan, once a leader in electric vehicle (EV) production, has struggled to keep pace with Toyota and Honda in the hybrid segment. A senior Honda official asserted that Honda had a clear advantage over Nissan in HV technology, further fueling tensions.
The collapse of the merger comes at a challenging time for Nissan, which announced a projected net loss of ¥80 billion for the fiscal year ending March 31. The company’s automobile division reported an operating loss of nearly ¥200 billion for the April-December 2024 period. A key factor in this financial downturn has been Nissan’s failure to introduce hybrid models in the United States, a market where hybrid demand is surging. Honda, which has performed well in the U.S. hybrid market, saw a merger as an opportunity to bolster Nissan’s presence in North America.
Despite the failed negotiations, Honda remains open to reviving discussions, but only under new leadership at Nissan. According to the Financial Times, Honda is willing to reconsider a deal if Nissan CEO Makoto Uchida steps down. The report highlights growing pressure on Uchida, particularly from Nissan’s board and its French partner Renault, following the breakdown of the talks.
Nissan has been attempting a turnaround strategy that includes cutting 9,000 jobs and reducing global manufacturing capacity by 20%. The company announced plans to provide an update on its restructuring efforts within the next month. However, internal resistance to change remains a significant hurdle. Sources indicate that Honda viewed Nissan’s reluctance to accept its proposals as an indication of misplaced pride and insufficient urgency regarding its precarious situation.
While Honda CEO Toshihiro Mibe has ruled out a hostile takeover, Nissan’s board has reportedly begun informal discussions about the timing of Uchida’s departure. Though Uchida has expressed his intent to remain until 2026, mounting pressure could lead to a leadership change in the coming months, potentially reopening the door for renewed merger talks.
