Nissan to bow out of historic tie-up with Honda, Nikkei says

TOKYO – Nissan Motor is pulling out of its deal with Honda Motor to combine both brands and regain global competitiveness, the Nikkei newspaper reported on Feb 5.

The pair had been negotiating the terms of a tie-up under which Honda would offer Nissan a lifeline by absorbing its struggling rival, and bring the two brands under a single holding company in 2026.

The two competitors failed to reach a consensus after seven short but tumultuous weeks of talks, according to the newspaper, which cited people it did not identify, bringing to a swift end what could have been a historic partnership for Japan’s auto industry.

The Tokyo Stock Exchange suspended trading of Nissan’s shares in response to the report.

Honda’s shares rose as much as 12 per cent, while Nissan fell as much as 6.4 per cent.

Spokespeople for both companies said the report was not based on announcements from either, and that a framework for ongoing negotiations will be announced as planned, albeit delayed once already, in mid-February.

Friction emerged between the two this week after media reports said Honda floated the idea of a complete acquisition, a proposal that met with strong opposition within Nissan.

From the moment initial reports of a so-called merger surfaced in December 2024, it was clear that Honda, with more than quadruple the market value, had the upper hand.

When the two announced the deal in December, Honda made it apparent that Nissan had to implement a restructuring plan in order for any transaction to materialise. 

An outdated product line-up, bloated dealership incentives and shaky leadership are just a few of the chronic issues ailing Nissan.

Without Honda’s backing, it is unclear how the brand plans to turn itself around.

The full picture of Nissan’s plight became clear in November 2024, after a 94 per cent drop in first-half net sales forced it to cut thousands of jobs, slash production capacity and lower its annual profit forecast by 70 per cent.

Then, weeks later, Honda unveiled plans to rescue Nissan by combining forces to regain lost ground in the US, where the popularity of gas-electric hybrids has given an edge to Toyota Motor, and in China, where wave after wave of electric vehicles has forced foreign brands to turn tail.

Nissan is 36 per cent owned by French carmaker Renault, which in late January sent representatives to Japan to express concern over the transaction and seek a premium for its stake, people familiar with the matter said. 

Mitsubishi Motors, which has reportedly decided against joining the alliance, said earlier this week it would make a final decision once Honda and Nissan reach an agreement later in February. BLOOMBERG