In a significant shift in strategy, Nissan is reportedly ending discussions with Honda regarding the formation of a joint holding company. Sources indicate that Nissan is now on the lookout for a new partner, ideally a technology expert based in the United States, to bolster its efforts in the rapidly evolving automotive landscape.
The decision comes as Nissan grapples with declining global sales and a pressing need to innovate in electrification and automation. The company’s primary market remains North America, where it aims to strengthen its position despite recent challenges.
During a meeting at Honda’s Tokyo headquarters, Nissan President Makoto Uchida informed Honda President Toshihiro Mibe of the decision to terminate the merger talks. A formal announcement regarding the negotiations is expected in mid-February, following a review of the discussions held on Thursday.
Reports suggest that Honda’s ambition to acquire Nissan and integrate it as a wholly owned subsidiary faced pushback from Nissan, particularly concerning the scale of investment and the restructuring demands Honda imposed. While Honda sought significant changes, Nissan has primarily focused on job reductions and production cuts without shutting down manufacturing, a move that may have disappointed Honda.
Following the announcement, Nissan’s stock saw an 8.7% increase during trading in Tokyo, reflecting investor optimism despite the company’s ongoing struggles. Nissan is set to release its third-quarter profits next week, following a staggering 94% drop in net income for the first half of the fiscal year, alongside plans for 9,000 layoffs and a reduction in manufacturing capacity.
The financial strain on Nissan raises concerns about its ability to attract new partners. The company may require external support, reminiscent of its previous alliance with Renault SA, to navigate its current predicament and recover from the fallout of its strategic partnership dissolution.
As Nissan’s board pressures Uchida and senior officials to devise a comprehensive restructuring plan, the automotive giant faces a critical deadline of February 13, coinciding with its quarterly results announcement. Analysts warn that without significant changes, Nissan may continue to see declines in earnings.
Despite its challenges, Nissan’s established brand and extensive manufacturing capabilities remain appealing to potential investors. In December, Foxconn, known for manufacturing iPhones, expressed interest in acquiring a stake in Nissan but withdrew when it learned of the ongoing merger discussions with Honda.
As Nissan embarks on this new chapter, the automotive industry will be watching closely to see how the company navigates its restructuring and seeks new partnerships to secure its future in a competitive market.