Japan’s Nissan may potentially end its merger discussions with Honda, as per a report. Nissan’s board members are expected to convene soon to decide their next steps.Â
According to a report in Reuters that quoted sources, this development casts uncertainty over a merger that could have resulted in the world’s third-largest automaker by sales and raises questions about Nissan’s ability to navigate its current challenges without external support.
The news of the potential end to merger talks led to a rise in the shares of both companies on Wednesday, with Honda’s shares increasing by over 2 per cent and Nissan’s by 1.6 per cent, despite a slight decline in Tokyo’s Nikkei 225 index.
Honda, Japan’s second-largest carmaker, and Nissan, the third-largest, had announced last year that they were in talks to merge, which would have marked a significant shift in an industry facing competition from China’s BYD and other electric vehicle newcomers. However, sources indicated that the discussions have been complicated by growing differences between the two parties, as per the report.
Nissan’s board is reportedly set to deliberate on ending the merger talks after Honda proposed making Nissan a subsidiary, a move that deviates from their initial discussions. Honda, with a market value nearly five times that of Nissan, is increasingly concerned about Nissan’s progress in its recovery plan.
Japan’s Asahi Shimbun newspaper had earlier reported that the merger might be called off. Representatives from both companies declined to comment on the status of the merger talks but stated that an announcement would be made in mid-February, as previously indicated.
Nissan has faced greater challenges than some other automakers in the transition to electric vehicles, having not fully recovered from the crises following the arrest and removal of former Chairman Carlos Ghosn in 2018. The merger discussions have also coincided with potential tariff disruptions from the United States. Analysts suggest that tariffs against Mexico could impact Nissan more severely than Honda or Toyota.
Nissan’s long-term alliance partner, Renault, had expressed openness to the merger with Honda. The French automaker holds a 36 per cent stake in Nissan, including 18.7 per cent through a French trust.