Honda and Nissan Merger Talks in Peril
Nissan Motor and Honda Motor have hit a standstill negotiating the terms of a merger, announced less than two months ago, that would have created one of the world’s largest auto groups.
Before their disclosure in late December that they were exploring combining operations, Nissan and Honda had discussed operating as partners under a holding company.
More recently, Honda pushed for a structure that would give it a bigger say in the holding company and proposed that Nissan become its subsidiary — a plan that Nissan rejected, said two people familiar with the matter who spoke on condition of anonymity because the negotiations were private.
From the beginning of the merger talks, a number of executives at Honda were sour on the idea of merging with Nissan, concerned about its financial state, one of the people said. Nissan has been reckoning with a drop in sales that has pushed it to make deep cuts to its global operations.
Honda viewed Nissan making progress with its restructuring plans as a condition for a potential merger to move forward. As it performed its own analysis, examining factors including projections of the profitability of Nissan models, the company decided it needed to lay down “strict” conditions for a merger, the person said.
It remains uncertain where Nissan and Honda will stand if the merger talks are formally suspended. The deal was viewed as a lifeline for Nissan in particular. Honda retains a profitable two-wheeler business, but both automakers are struggling under the weight of the difficult and expensive transition toward electric and software-laden vehicles.
Honda and Nissan had pitched their combination as a way to share the financial burden by developing and investing in next-generation vehicles together. Nissan sells more than three million vehicles a year, while Honda sells nearly four million. A merger would position them as the world’s third-largest automaker group, behind Toyota and Volkswagen.
Talks are continuing, the two people familiar with the negotiations said. Nothing formal is likely to be announced by the companies until at least next week, when Honda and Nissan report their earnings for the recent October-December quarter.
Nissan’s shares fell nearly 5 percent in trading on Wednesday. Honda’s shares gained more than 8 percent.
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