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Honda & Nissan Call Off Merger Talks - Pride & Differing Directions To Blame?
Japanese automotive manufacturers Honda and Nissan have called off discussions that would have seen them merge their businesses as the industry switches to EVs, a segment dominated by Chinese automakers.
The two Japanese automotive giants had announced their plans to discuss a merger in late December. However, less than two months after that announcement, the difference of opinions about how the future merged entity would function scuppered those dreams of a Japanese automotive conglomerate.
Honda Nissan Merger Failure - What Caused The Demise?
Nissan, in its statement announcing the shelving of merger talks, laid the blame squarely at Honda's feet claiming that the latter had changed the terms of the merger. The statement reads as follows, "During the discussions between the two companies, various options were considered regarding the structure of the business integration. Honda proposed changing the structure from establishing a joint holding company, where Honda would appoint the majority of directors and the chief executive officer based on a joint share transfer as initially outlined in the MOU, to a structure where Honda would be the parent company and Nissan the subsidiary through a share exchange."
Reports by Reuters and AFP from earlier in the week had alluded to this with both stating that Honda's proposal to make Nissan its subsidiary was considered an insult by the Yokohama-based carmaker.
The Reuters report also stated that the Nissan leadership was in denial about just how deep a problem it finds itself in. During talks, Honda had reportedly pressured Nissan to make big cuts to both its workforce and its manufacturing capacity. However, Nissan was unwilling to close down some of the factories due to political concerns, claims the Reuters report.
Honda Nissan Merger Failure - Deal Still On For EVs
However, the failure of the merger talks don't seem to have dented the determination of the two carmakers to take on the growing EV threat from Chinese manufacturers as the industry pivots towards electric vehicles.
Both carmakers have stated that they will continue to work together within the framework of a strategic partnership aimed at the era of intelligence and electrified vehicles. Both carmakers and Mitsubishi had signed a Memorandum of Understanding on August 1 last year setting up the framework for this strategic EV partnership.
Honda Nissan Merger Failure - What are Nissan's Other Options?
Nissan is still continuing to look for a partner to help bring its struggling business back to its glory days. Before the attempted Honda merger was announced, Nissan had been approached by Taiwanese electronics giant Foxconn to buy a majority stake in the Japanese carmaker. When that had failed, Foxconn had approached Nissan's alliance partner Renault, which owns a 35% stake in the Japanese carmaker, but that was put on hold as the Honda merger deal emerged into the light.
With the Honda merger deal off the table, we do wonder what's next for Nissan? Will the Japanese firm now maybe listen to Foxconn or will Renault get that ball rolling? Only time will tell...
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