Honda-Nissan Merger May Not Go Ahead After All

At the tail end of last year, reports started cropping up that Nissan and Honda were set to join together in an unprecedented merger, which would have seen the two Japanese giants create a single holding company that would likely be one of the biggest entities in the automotive industry.

Now, however, that merger is in doubt, according to an Autocar report. It cites both Japanese newspaper Nikkei and the Financial Times, with the former reporting that Nissan is eyeing an exit from the deal over differences in how the merger should work.

The two companies signed a memorandum of understanding on 23 December last year, agreeing to look into merging operations, strengthening an agreement made earlier in 2024 to collaborate on electric cars.

However, the FT reports that Honda unexpectedly proposed what would essentially be a full takeover of Nissan, rather than the 50/50 split originally tabled. That suggestion was reportedly down to Honda’s considerably higher market valuation – around £31 billion, compared to Nissan’s circa £8 billion value.

Nissan’s apparent reconsideration could have been spurred on by Renault, which owns a 36 per cent stake in Nissan. The French manufacturer reportedly urged Nissan to seek better terms following Honda's proposal.

Should the deal still go ahead, it would create a huge conglomerate, likely encompassing Honda, Nissan, and both brands’ luxury marques, Infiniti and Acura. Nissan’s own ‘alliance’ with Renault and Mitsubishi likely wouldn’t fall under the merger, with Mitsubishi expressing its desires to remain independent if it went ahead.

Part of the reason for the proposed merger was declining sales for both manufacturers throughout 2024, particularly Nissan, which experienced a sharp drop in profit last year. Increasing competition from Chinese brands, particularly in the EV market, was largely behind the original tie-up on EVs, and it’s not clear if that’ll still go ahead if the merger doesn’t.