Honda is reportedly considering relaunching merger talks with Nissan, on condition that Nissan CEO Makoto Uchida steps down. This is as reported by the Financial Times. The aim would be to create the world's fourth-largest automaker, with an estimated value of $60 billion.
Initial talks collapsed last week, deepening the crisis at Nissan and underlining the pressure on incumbent automakers in the face of the rise of the Chinese auto giants.
Honda did not confirm the information; Nissan declined to comment.
A weakened Nissan under pressure
Uchida is under heavy pressure to turn Nissan around, this after years of declining sales and internal turmoil.
The merger talks with Honda collapsed after just over a month; sources close the matter told the Financial Times it was due to Nissan's hubris and lack of recognition of its critical situation. Honda wanted to integrate Nissan as a subsidiary, a proposal that Nissan reportedly refused.
Again according to the Financial Times, Nissan’s main partner Renault also wants Uchida to leave. Nissan is currently working on a restructuring plan that includes 9,000 job cuts and a 20-percent reduction in global production capacity. That plan should be updated in the coming month.
Uchida reportedly wants to stay on until 2026, but is facing growing opposition from the board of directors and from Renault. Nissan has reportedly already begun informal discussions on the timing of his possible departure.
Mitsubishi, the big winner in a Honda-Nissan merger?
The announcement of a possible resumption of negotiations triggered an 8.6-percent jump in Mitsubishi Motors shares.
According to Tatsuo Yoshida, senior analyst at Bloomberg Intelligence, a Nissan-Honda merger would be a win-win scenario, especially for Mitsubishi.
Mitsubishi, which is heavily dependent on Nissan, would be able to diversify its partnerships and better face global competition. Thanks to its strong presence in Southeast Asia, Mitsubishi could play a key role in this new alliance.
However, Yoshida warns that until Nissan recovers, Mitsubishi's future will remain uncertain.
Outside investors are also interested in Nissan, including Taiwanese technology giant Hon Hai Precision Industry Co. and private equity firm KKR & Co.
An inevitable merger?
If Nissan struggles to restructure, a merger with Honda could become a necessity. For now, everything will depend on the position of the board of directors and Makoto Uchida's ability to hold on to his post in the face of mounting pressure.