Japanese automaker Nissan finds itself at a crossroads after ending merger negotiations with Honda. According to sources close to the matter, the company is now looking to establish new partnerships, and the Taiwanese group Foxconn is among the potential candidates.
The abandonment of these discussions marks a turning point for Nissan, which had hoped to join forces with Honda to create the world's third-largest automaker. This merger would have been a response to the profound upheavals in the sector, notably the rise of electric vehicles and connected cars.
Disagreement over governance
Last Thursday, Nissan CEO Makoto Uchida met with his Honda counterpart, Toshihiro Mibe, to signal his intention to abandon the talks. The main stumbling block would have been Honda's desire to make Nissan a subsidiary, a condition deemed unacceptable by Nissan, according to a well-informed source.
Nissan, seeking to modernize, is now considering alliances with technology companies to better adapt to market challenges. Among the options under consideration is Foxconn, world leader in electronics and manufacturer of Apple's iPhones.
However, Nissan had already rebuffed an approach from Foxconn in December, despite the fact that the Taiwanese company has strengthened its expertise in electric vehicle manufacturing under the leadership of Jun Seki, a former Nissan executive.
A strategic crisis for Nissan
Negotiations between Honda and Nissan began in December with the signing of a memorandum of understanding. But the differences between the two groups have widened, culminating in Honda's desire to integrate Nissan as a subsidiary.
Nissan is expected to make its withdrawal from these discussions official at a board meeting scheduled before the announcement of its third-quarter results. For its part, Honda is maintaining its position: integration is only conceivable if Nissan agrees to become a subsidiary, according to NHK, Japan's public television station.
Honda is currently Japan's second-largest automaker after Toyota, while Nissan is in third place. The failure of this merger raises questions about the future of Nissan, which is struggling to turn around its financial situation. The company has already announced a restructuring plan involving 9,000 job cuts and a 20% reduction in worldwide production capacity.
Market reaction
Following the announcement, Nissan shares jumped by 7.3 percent, while Honda’s fell by 4 percent, reversing the previous day's trend.
The end of this attempted merger opens a new chapter for Nissan, which must now find other solutions to relaunch itself in a fast-changing automotive market.