Nissan to Reconsider Merger Plans with Honda, Insider Sources Report

In late 2024, Nissan Motor Corporation and Honda Motor Corporation signed a memorandum of understanding (MoU) to start discussion on building the world’s third biggest automotive group via a business merger. The Japanese OEMs aimed to finalize the $60 billion potential integration by June 2025. However, the plan seems to be on the verge of collapse as Nissan “withdrawn the basic agreement for the merger with Honda.”

What’s the Issue?

While there is no official word for both carmakers, but sources said that Nissan rejected with Honda’s suggestion of making it a fully owned subsidiary. Nissan is already facing challenges in managing its global operations, while Honda is not convinced that Nissan can recover or turn its business fortune. Reports further states that Honda is under shareholder and internal pressure to take full ownership of the struggling carmaker. There is still no clarity whether the deal is completely scrapped off or if discussions might restart at a later stage.

Impact on the market:

Interestingly, Nissan’s stock prices have been declined over 4 percent after the reports its backing-off emerged on the web. On the other hand, Honda’s stock value has increased up by over 8 percent, indicating that investors are taking it on a positive note. It’s important to note that the Japanese automakers have denied the reports and stated that they are still considering options, and come up with a final decision by mid-February.

An insight on Nissan’s global business:

Nissan has been struggling hard with the sever financing crisis and improving its global sales, especially after splitting its alliance with Renault. In September 2023, Renault ended its common purchasing agreements with Nissan and Mitsubishi. Nissan witnessed a significant decline in profits during the six months ending in September compared to the corresponding duration in 2023. Therefore, it announced a cost-cutting plan, including reducing global manufacturing by 20 percent and laying off 9,000 employees. If reports are to be believed Nissan might face bankruptcy in 2026 due to a huge debt coming its way.

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