Honda, Nissan cancel merger

Honda and Nissan have confirmed they are no longer going ahead with a merger proposal that also included Mitsubishi.

The deal would have created the world’s third largest car maker but collapsed after Nissan was proposed as a subsidiary of Honda. The three companies will continue with a strategic partnership in software defined vehicles and EVs while Nissan dramatically restructures its business (see below).

“Since signing the memorandum of understanding (MOU), the management teams of both companies, including the chief executive officers, have discussed and considered the surrounding market environment, the objectives of the business integration, and the management strategies and structures post-integration,” said Honda. “Additionally, taking into account the importance of a business integration, both companies have carefully consulted with various stakeholders.”

This would have included Renault which owns a 35.7% stake in Nissan, which is currently restructuring its business.

Honda proposed changing the structure from establishing a joint holding company, where Honda would appoint the majority of directors and the chief executive officer based on a joint share transfer as initially outlined in the MOU, to a structure where Honda would be the parent company and Nissan the subsidiary through a share exchange.

“As a result of these discussions, both companies concluded that, to prioritize speed of decision-making and execution of management measures in an increasingly volatile market environment heading into the era of electrification, it would be most appropriate to cease discussions and terminate the MOU,” said Honda.

The collapse of the deal opens up the prospect of a bid for Nissan by contract manufacturer Foxconn, acquiring the Renault stake.

“Going forward, the three companies will collaborate within the framework of a strategic partnership aimed at the era of intelligence and electrified vehicles,” said Honda.

Nissan’s restructuring is currently cutting ¥400bn ($2.6bn) from its business this year. This will allow the company to be profitable shipping 2.5m vehicles rather than the currently 3.1m units through a 20% reduction in manufacturing capacity, and significant job cuts. Cuts at the Smyrna and Canton plants in the US, and in Thailand, will reduce headcount in vehicle and powertrain plants by 5,300 this year and 1,200 in FY26, contributing to a total reduction of 6,500 staff.

The impact on other sites such as the plant in Sunderland, UK, will be detailed later.

It plans to introduce its first model based on an integrated platform across several vehicles families will launch next year, and is aiming to save ¥60bn ($390m) in design-driven costs starting with the simplification of designs across its six major global products. Various initiatives for manufacturing operational cost reductions include reducing parts complexity by up to 70%, improving production planning to eliminate supply chain inefficiencies and lower warehouse costs, and enhancing efficiency while reducing costs in after-sales parts warehousing.

It plans to launch a new LEAF, an all-new compact EV, and a new energy vehicle (NEV) targeted at the Chinese market, as well as having more focus on intelligent cockpits and driver assistance features will be introduced in models planned for launch by fiscal year 2026.

Honda has also restructured to being its SDV business into the mainstream operation.