Honda and Nissan End Merger Talks, But Remain Collaborative

Two major Japanese automakers, Honda Motor and Nissan Motor, have failed to agree on a merger to form the world’s third-largest player, but having completed negotiations on this topic, they have not abandoned strategic cooperation in the development of electric vehicles, traction batteries, autopilots and software.

Image source: Honda Motor

Formally, such agreements were reached in the second half of last year, but towards the end of the year, the companies decided to discuss the possibility of a structural merger. The negotiations, which lasted for about three months, did not allow the parties to find acceptable merger conditions, so it was decided to abandon these attempts. As is known, Mitsubishi Motors also looked at this deal, but preferred to be satisfied with the opportunities available within the alliance with Renault and Nissan.

The abandonment of such strategic alternatives, as Bloomberg notes, will have serious consequences for all three companies, but will especially affect Nissan Motor, which saw an alliance with its partners as a way out of its less than stable financial situation. Honda Motor demonstrated confidence in its future by keeping its annual profit forecast unchanged at $9.22 billion after negotiations with Nissan fell apart.

Honda Motor CEO Toshihiro Mibe said, “Although we consider the outcome a failure, we have a mutual appreciation for the synergies that can be exploited in our strategic cooperation.” He said Honda is not considering a hostile takeover of Nissan, and the Japanese government is not in talks with the latter company either.

Against this backdrop, Nissan Motor did not hide its pessimism, and reported that it had lowered its annual profit forecast by 20% to $780 million. As noted earlier, Taiwanese contract electronics manufacturer Foxconn did not hide its interest in cooperation with Nissan, and even expressed its readiness to buy Renault’s approximately 36% stake in the Japanese automaker. Since the terms of the deal to merge Honda and Nissan did not suit Renault, the latter’s representatives preferred to express satisfaction with the outcome of the negotiations and Nissan’s intentions to focus on its own restructuring.

Honda expects to double the number of hybrid vehicles sold annually to 1.3 million units by the end of the decade, with the North American market accounting for most of the growth. In the two-wheeled motorcycle segment, Honda this week raised its forecast for sales in the current fiscal year from 20.2 million to 20.6 million units. In Asia, these vehicles are in consistently high demand. However, setbacks in the domestic auto market forced Honda to lower its forecast for the number of passenger cars sold in the outgoing fiscal year from 3.8 million to 3.75 million units. The company is also not abandoning plans to buy back its own shares in the amount of $7.1 billion.