Yokohama, Japan – Nissan and Honda have decided to call off their $50 billion merger plan, which would have seen the creation of the world’s third-largest automaker. Both Japanese companies cited declining sales and a slow transition to electric vehicles as key factors in this decision.
The cancellation of the deal, announced in December, was announced by the automakers on Thursday. They mentioned that the volatile market environment required them to prioritize swift decision-making and effective management practices. Despite the merger falling through, the companies stated that they would continue to collaborate within a strategic partnership.
Nissan CEO Makoto Uchida disclosed that Honda’s desire for Nissan to become a subsidiary instead of an equal partner was a major factor in the deal collapsing. Both companies released their financial earnings shortly after the merger was cancelled, highlighting the stark difference in performance between them.
Honda reported a notable 25% increase in pre-tax profit for the recent quarter, driven by strong US sales and a thriving motorcycle business. On the other hand, Nissan’s profits plummeted to 5.1 billion yen ($33 million) in the nine months leading to December. Looking ahead, Nissan is implementing a significant restructuring plan that includes cutting 9,000 jobs globally.
Facing challenges such as a lack of electric models impacting market share and production cuts, both Nissan and Honda are now navigating uncertainties around potential US tariffs on imported vehicles. Nissan has hinted at relocating production from Mexico if tariffs are imposed, while Honda is racing to export vehicles from Canada and Mexico to the US before the waiver expires.
The breakdown of the Nissan-Honda merger deal has prompted Nissan to explore alternative investment avenues, with potential interest from Foxconn and private equity firm KKR. The future remains uncertain for both automakers as they navigate through a rapidly evolving automotive landscape.