Nissan-Honda Merger Falls Apart: Here’s Why Collaboration Failed

Due to disagreements over strategy and control, the planned merger between Nissan and Honda has formally collapsed. The purchase eventually came to a standstill, despite initially being viewed as a revolutionary step to become one of the biggest automotive firms globally.

The goal of the December 2024 announcement was to combine the two automakers into a single parent company by August 2026. The proposal was a reaction to the rapid transition to electric cars (EVs) and the increasing competition from Chinese automakers. Instead of an equal partnership, Honda proposed reorganizing the agreement to turn Nissan into a subsidiary through a share swap.

Nissan refused to accept what was perceived as Honda's move to seize complete control.
Honda CEO Toshihiro Mibe admitted the proposal was too ambitious and could slow down their ability to compete. Meanwhile, Nissan CEO Makoto Uchida pushed back, emphasizing the importance of keeping Nissan independent.

Now that the transaction is off the table, Nissan finds itself in a difficult financial situation. The business just revealed a net loss of $89.5 million and a 78% decline in operational profit. Nissan has had to reconsider its approach as a result of declining sales and mounting unsold inventories.

Nissan has proposed a $2.59 billion cost-cutting strategy over the next two years in order to stabilize. The proposal calls for the closure of three plants and the layoff of around 9,000 workers globally. Nissan is now looking at new alliances, such as a possible partnership with Foxconn, a massive electronics company based in Taiwan.