On February 6, 2025, according to the Asahi Shimbun, Nissan President Makoto Uchida has officially informed Honda President Toshihiro Mibe that the merger negotiations between the two parties have been terminated. However, Nissan issued a statement on the 5th, responding to some media reports about the breakdown of negotiations, saying that a final decision has not yet been made, and the two sides are still negotiating, and is expected to give a clear answer in mid-February.
This back-and-forth of news has made the most talked-about merger plan for the Japanese automotive industry of this century even more confusing. From the official announcement of the start of negotiations on December 23, 2024, to the collapse of negotiations, the aborted death of this potential deal not only shocked the market, but also reflected the complex challenges of traditional automakers in the transition to electrification and intelligence. The editor of China Exportsemi would like to talk about some personal observations and thoughts on this matter. (Related reports: Global car companies will reshuffle: starting with Honda Nissan's official announcement).
The vision of the merger: the unfinished dream of the world's third-largest car company
Against the backdrop of the global automotive industry facing accelerated changes in electrification and intelligence, the merger of Honda and Nissan was once highly anticipated. According to market estimates, if the two car companies are successfully integrated, the new company's annual sales will exceed 30 trillion yen (about 1.4 trillion yuan), and the annual operating profit may reach 3 trillion yen (about 140 billion yuan), surpassing General Motors in terms of scale and is expected to become the world's third largest automaker, second only to Toyota and Volkswagen. The merger is not only aimed at strengthening the competitiveness of Japan's auto manufacturing industry in the global market, but is also seen as an important means of resisting the impact of emerging forces such as Tesla and BYD.
However, despite the ambition of the merger, the reality is far more divisive than expected. This seemingly win-win plan for "huddling together for warmth" eventually collapsed due to multiple factors such as management disputes, technical route differences, and internal opposition, making the future of Honda and Nissan even more uncertain.
Picture: Asahi Shimbun also reported that the Honda-Nissan merger has fallen through
The core contradiction of the breakdown of the negotiations: the struggle between management and development direction
1. Management Battle: Who Will Control the New Combined Company?
Initially, the parties envisaged a merger on a parcionic basis through the establishment of a holding company. However, as negotiations progressed, Honda proposed a more dominant plan, which was to make Nissan its subsidiary and Honda to take control of the new company. The core purpose of this proposal is to accelerate decision-making efficiency and optimize Nissan's operations through integrated management.
However, Nissan strongly opposes this, arguing that this plan will lead to the loss of its independence after the merger and is not in line with its long-term development strategy. A Nissan insider said: "We are not a vassal of Renault and will not be affiliated with Honda. This stance suggests that Nissan prefers to maintain independent operations rather than accept unilateral acquisitions.
2. Divergence of technical routes: hybrid vs. pure electric
From the perspective of technology strategy, there are also significant differences between Honda and Nissan in the direction of new energy transformation. Honda relies heavily on hybrid technology (HEV), especially in the global market, where the competitiveness of hybrid technology has been widely recognized. Nissan, on the other hand, is firmly betting on battery electric vehicles (BEVs), and its "Nissan Leaf" is one of the best-selling electric vehicles in the world. The divergence of this technical route makes it difficult for the two sides to reach a consensus on the R&D direction, production layout and market positioning.
3. Personnel and layoffs: Strong resistance from Nissan employees
In addition to the contradiction between management and technology strategy, Honda also asked Nissan to make a series of structural adjustments before the merger, such as laying off 9,000 employees worldwide, cutting costs, and reducing executive compensation. However, these reform plans have been met with strong opposition from Nissan's internal employees, and labor unions have even threatened strike action, making it difficult to move forward with the recovery plan and further slowing down the process of merger negotiations.
External Analysis: Is It Complementary, or Is It Difficult to Integrate?
Former Nissan CEO Carlos Ghosn once said in an interview with the media that he was not optimistic about the merger between Honda and Nissan, believing it to be a "desperate move". He pointed out: "The two companies are highly similar in terms of market positioning, brand tonality, supply chain management, etc., but their corporate cultures and management styles are completely different, which makes integration extremely difficult.”
From the perspective of market competition, Honda and Nissan have a global market share of 5.7% and 3.8%, respectively, and it is doubtful whether the two will be able to achieve market synergies after the merger. In addition, in terms of core component supply chains, Honda prefers to cooperate with Japanese suppliers, while Nissan has strengthened cooperation with European and Chinese supply chains during the alliance era. The difference in this model has also become a major obstacle to the merger of the two parties.
It is worth noting that there have been several cases of failed integration in the Japanese automotive industry before. Mazda, for example, was once deeply tied to Ford, but eventually parted ways due to cultural differences and different market strategies. A similar scenario is likely to be repeated between Honda and Nissan.
Impact on the industry: The transformation dilemma of traditional car companies
If the Honda-Nissan merger ultimately fails, it will be a continuation of the respective strategies of the two companies and a reflection of the complex realities of the entire automotive industry in the process of new energy transition. With the increasingly fierce competition in the global electric vehicle market, traditional car companies not only have to face challenges from emerging forces such as Tesla and BYD, but also have to make difficult choices in terms of supply chain integration, brand upgrading, and market positioning.
1. Impact on Nissan: How to break through?
For Nissan, the merger failure means it must find new capital to improve its current poor profitability. According to Nikkei, Nissan's global sales have continued to decline in recent years, and its operating profit margin in 2024 is only 2.8%, far lower than Honda's 7.5%. Next, Nissan needs to accelerate the renewal of its electric vehicle lineup, while looking for new growth opportunities in the North American and Chinese markets.
2. Impact on Honda: Independent Expansion or New Alliance?
For Honda, if it fails to integrate Nissan in the end, it is still looking for new partners around the world. Previously, Honda had announced a deepening EV collaboration with General Motors and plans to launch more models based on GM's Ultium battery platform in the North American market. In the future, Honda may accelerate its electrification process by establishing strategic alliances with other international auto giants.
3. Implications for the industry as a whole
The situation faced by Honda and Nissan is further proof of the integration challenges faced by traditional car companies in the transformation process. In the critical period of electrification and intelligent transformation, the merger of car companies is not a panacea, and the real breakthrough needs to be built on technological innovation, market adaptability and flexible management mechanism.
Future prospects: cooperation and competition coexist
If the merger talks ultimately fall through, Honda and Nissan still plan to cooperate in some areas, especially in new energy technologies and autonomous driving systems. In the future, as competition in the electric vehicle market intensifies, the cooperation model between traditional car companies may become more flexible, shifting from simple capital consolidation to technology alliances and supply chain integration.
Overall, although the merger plan between Honda and Nissan may fail, this event undoubtedly provides an important reference sample for the global automotive industry. In the face of industry changes, traditional automakers need to find a balance between cooperation and independent development, while avoiding missing market opportunities due to internal management and strategic differences. In the future competitive landscape, whoever can adapt to changes faster will be able to grasp the initiative in the next round of industry reshuffle. What is the outcome, China Exportsemi will continue to pay attention, let us wait and see!
