Nissan and Honda’s ambitious $60 billion merger talks have collapsed after just over a month of negotiations. The deal, which could have created one of the world’s largest automakers, fell apart due to Nissan’s reluctance to cede control, Honda’s demands for aggressive restructuring, and fundamental disagreements over the direction of the partnership.
Nissan, which has struggled with declining sales and management turbulence, was initially open to a merger. The Japanese automaker had underestimated the hybrid market in the U.S. and faced financial strain, making Honda’s proposal a potential lifeline. However, Nissan insisted on equal footing in the talks, despite its weaker financial position.
Honda, on the other hand, wanted deeper cost-cutting measures, including factory closures and workforce reductions. Nissan resisted these demands, unwilling to shut politically sensitive factories in places like Kyushu, Tennessee, and Mexico. This resistance fueled tensions between the two companies.
Negotiations reached a turning point in late January when Honda abruptly changed its stance, proposing that Nissan become a subsidiary rather than an equal partner. This move was seen as an affront to Nissan’s long-standing history and brand identity. Sources say Nissan’s leadership, particularly CEO Makoto Uchida, was blindsided and found the proposal “outrageous.” The situation was further complicated by Nissan’s top shareholder, Renault, which objected to Honda’s takeover approach, calling it unacceptable.
With talks officially ending, Nissan and Honda may revert to their original agreement to collaborate on technology without merging. Meanwhile, Nissan is exploring new partnerships, including a potential collaboration with Taiwanese contract manufacturer Foxconn. Foxconn, which manufactures Apple’s iPhones, is reportedly interested in working with Nissan to establish a stronger presence in the EV market.
Industry experts believe Foxconn could be a more accommodating partner, given its need for a reputable automotive brand. However, questions remain about Japan’s government stance on a possible acquisition by a foreign company.
As Nissan continues to navigate an increasingly competitive auto industry, analysts warn that the company’s management must adopt a more realistic strategy. With mounting pressure from Chinese automakers and potential U.S. tariffs on Mexico-made vehicles, Nissan’s future hinges on decisive leadership and strategic alliances.
