Why Nissan CEO wants to end merger talks with Honda

Nissan’s CEO, Makoto Uchida, informed Honda’s counterpart, Toshihiro Mibe, that he intends to halt merger discussions, according to a source familiar with the matter. The decision follows Honda’s proposal to make Nissan a subsidiary, a move that Nissan rejected as part of the planned integration.

The Japanese automakers had signed a memorandum of understanding (MoU) in December 2024 to explore a merger under a holding company. The goal was to form the world’s third-largest automaker and better compete in the rapidly evolving automotive industry. However, growing differences between the companies led to a breakdown in talks.

A source close to the negotiations stated that “a consensus was reached on Nissan’s side that the talks cannot proceed under Honda’s proposal.” This marks a significant shift, as the merger discussions had raised expectations of a strategic alliance that could have reshaped the automotive landscape.

Nissan is set to formally announce its withdrawal from the MoU during a board meeting ahead of its third-quarter earnings announcement next week. The decision adds uncertainty to Nissan’s future as it struggles with ongoing challenges. The company is already in the midst of a turnaround plan, which includes cutting 9,000 jobs and slashing global production capacity by 20%.

Honda, Japan’s second-largest automaker, had insisted on making Nissan a subsidiary to move forward with the merger. The automaker’s stance has been clear—no deal without Nissan’s agreement to this structure.

Both Nissan and Honda have declined to comment on the status of the talks, reaffirming earlier statements that they hoped to finalize their discussions by mid-February. However, the collapse of the talks raises pressing questions about Nissan’s ability to navigate its crisis without external support.

The stock market reacted swiftly to the news. Nissan’s shares rose 7.6% by Thursday afternoon, while Honda’s saw a drop of 3.5%. This turnaround marks a stark contrast to their performance the previous day.

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