Honda’s Proposal to Nissan: A Subsidiary or Nothing
The potential merger between Honda and Nissan is facing serious obstacles. Originally, the two Japanese automakers planned to form a joint venture with equal management, but according to multiple reports, Honda has now suggested that Nissan become its subsidiary instead. The merger details were initially set to be revealed by the end of January, but deadlines have now been pushed to mid-February. The main roadblock? Honda’s strict conditions, which Nissan has so far been unable to meet to prove its ability to turn its business around.
Nissan May Walk Away from the Deal
According to the latest developments, Nissan is considering rejecting Honda’s offer altogether. Reports suggest that there is growing internal consensus within Nissan that reaching mutually acceptable terms is virtually impossible. Analysts predict that Honda’s plan to make Nissan its subsidiary would trigger strong resistance, as Nissan is determined to maintain its independence. The company, which recently bought back a portion of its shares from Renault, has made it clear that strengthening its autonomy is a top priority. This could ultimately derail the entire merger.
Honda Demands Proof of Financial Stability
Before proceeding with the merger, Honda has set strict financial requirements for Nissan. Specifically, Nissan must generate at least 400 billion yen ($2.6 billion) in revenue by the 2026 fiscal year. However, the company’s forecast for 2024, ending in March, stands at just 150 billion yen ($950 million)—far below Honda’s expectations.
To improve its financial standing, Nissan has announced significant cost-cutting measures. The automaker plans to lay off 9,000 employees worldwide and scale down production by 20%. In the U.S., workers at three manufacturing plants have been offered early retirement packages.
Honda Unimpressed by Nissan’s Efforts
Despite Nissan’s drastic cost-cutting moves, Honda’s leadership remains unconvinced. They expect even more aggressive steps to streamline operations. In addition to financial demands, Honda also wants Nissan to sever all ties with Renault—its long-time strategic partner.
The final outcome of the merger talks will be determined in the coming months, but at this stage, it seems Nissan is unwilling to sacrifice its independence, while Honda refuses to make compromises.
