- Honda isn’t convinced Nissan’s recovery plan will work and wants full control instead.
- While the deal could work for Honda, it appears unlikely that Nissan would be on board.
- Nissan could be hit particularly hard by tariffs enacted against Canada and Mexico.
Update: Shortly after reports surfaced that Nissan had rejected Honda’s proposal to make it a subsidiary, sources familiar with the matter revealed Wednesday that Nissan is now preparing to walk away from $60 billion merger talks with Honda, according to Kyodo News. If completed, the deal would have created the world’s third-largest automaker.. However, the situation remains uncertain—The Washington Post reports that no final decision has been made to scrap the merger. As the situation unfolds, we’ll continue to provide updates as new details emerge.
There’s another twist in the tale for the proposed merger between Japanese automotive juggernauts Nissan and Honda. Soon after it was revealed that Nissan may have to triple its profits for the merger to get the green light, it’s been revealed that Honda has proposed buying shares of Nissan and turning the struggling brand into one of its subsidiaries.
Unnamed sources with information about the proposal understand that Honda isn’t convinced by Nissan’s recovery plans, and thinks more needs to be done to bring it back into the blue. To do this, it could potentially buy up Nissan shares and turn it into a subsidiary. However, this plan will likely face significant opposition from Nissan.
Read: Honda And Nissan Delay Merger Update Until Mid-February
According to analysts, Nissan is fearful such a move could undermine its autonomy in the future. Additionally, Nissan is said to be opposed to Honda dramatically increasing its involvement in the brand’s management, Nippon reports.
Nissan has proposed several ways that it can restructure. For example, it plans to slash 9,000 jobs worldwide and also intends to cut global production capacity by 20%. It’s also looking to introduce early retirement programs at three of its US plants. Kyodo News understands that Honda is demanding Nissan make more significant changes.
Finalizing the merger is proving difficult. Ex-Nissan and Renault boss Carlos Ghosn has suggested that Honda is being pushed into the merger by Japan’s Ministry of Economy, Trade, and Industry, as they do not want one of their most famous companies to fall into the possession of foreign owners. Honda has also set Nissan some strict financial targets that it needs to hit to ensure the merger goes ahead.
Carscoops understands that Nissan will need to generate roughly 400 billion yen ($2.6 billion) in the 2026 fiscal year. That won’t be easy. Its operating profit recently fell from 3367 billion yen ($2.3 billion) to a measly 32.9 billion ($225 million). Nissan’s net income for the first half of fiscal 2024 has also cratered 93.5% to 19.2 billion yen ($131 million).
Under Threat From Tariffs
Nissan also has tariffs to worry about. While the Trump administration recently paused planned 25% tariffs for Mexico and Canada, Nissan could be hit hard if these tariffs go ahead. Important models like the Infiniti QX50, QX55, Sentra, Kicks, and Versa are all built by Nissan in Mexico and imported into the United States. Given the precarious financial position it’s already in, these tariffs could be detrimental to it.
“The problem is Nissan, which is basically barely making money in the automotive business,” Macquarie head of mobility research James Hong told Reuters. “The longer the tariff stays, I think it can be quite a big threat for Nissan. And eventually, if the merger actually goes through, then it can be a burden to Honda as well.”
