Nissan was in deep trouble late last year. Sales were down, and management was struggling. Rival Honda saw an opportunity. It proposed a $60 billion Nissan-Honda merger to help both companies compete against Chinese automakers.
The deal could have created one of the world’s largest car manufacturers. But in just over a month, talks collapsed. Pride, slow decision-making, and a last-minute change in terms doomed the agreement. Here’s what happened.
Nissan’s Decline and Honda’s Offer
Nissan had been struggling for years. Sales were falling, especially in the U.S., where it had underestimated demand for hybrid cars. Internal turmoil also weakened the company.
Honda stepped in with a bold plan. A merger could strengthen both brands and create a stronger competitor in the evolving auto industry. Nissan initially showed interest, but tensions soon surfaced.
Why the Merger Failed
Several key factors led to the breakdown of talks:
- Nissan Wanted Equal Treatment
- Honda expected Nissan to accept a weaker position in the deal. But Nissan, once Japan’s second-largest automaker, refused to be treated as a junior partner. It insisted on near-equal status despite its financial troubles.
- Honda Demanded More Cost-Cutting
- Honda wanted Nissan to shut down more factories and cut more jobs. Nissan resisted. Factory closures would have been politically sensitive and financially damaging.
- Slow Decision-Making at Nissan
- Honda executives grew frustrated with Nissan’s slow responses. They saw Nissan’s management as overly cautious and resistant to necessary changes.
- Honda’s Last-Minute Change
- Originally, the plan was a merger. But in late January, Honda proposed making Nissan a subsidiary. Nissan executives were blindsided. They saw the move as an insult and rejected it outright.
The Breaking Point: Nissan’s Factory Plans
Nissan’s unwillingness to close certain factories became a major sticking point. Key plants in Kyushu, Japan, and major facilities in Mexico, the U.K., and the U.S. were seen as essential to Nissan’s EV future.
In January, Nissan’s executive Hideyuki Sakamoto visited Kyushu and announced plans for a new EV plant with 500 jobs. The move reinforced Nissan’s commitment to its factories, directly clashing with Honda’s demands for cuts.
Shortly after, Honda CEO Toshihiro Mibe informed Nissan that the company would have to become a Honda subsidiary. The proposal went against their initial agreement and marked the breaking point.
Fallout and Future Plans
After Honda’s demand, Nissan CEO Makoto Uchida decided to walk away from the talks. Renault, Nissan’s top shareholder, also opposed the deal, calling it an unfair takeover attempt.
With the deal dead, both companies must find new strategies. Nissan is now looking at potential partnerships, including talks with Taiwanese manufacturer Foxconn.
For Nissan, the failed merger leaves big questions. Can it recover on its own? Industry analysts believe the company still underestimates the scale of its problems. Without a strong turnaround plan, Nissan’s future remains uncertain.
Meanwhile, Honda continues its focus on hybrid and EV technology, looking for alternative ways to strengthen its market position. The failed merger serves as a reminder of how difficult large-scale auto industry consolidations can be, especially when national pride and corporate identity are at stake.
