Nissan is preparing to pulling out of merger talks with Honda in order to try to find another partner to help with the shift towards electric vehicles.
The two Japanese automotive firms revealed in December that they were considering a £46bn merger, alongside Mitsubishi, to create the world’s third-largest carmaker in terms of annual sales. However, the talks have stuttered amid tensions over the perceived imbalance between the parties.
Nissan is looking for a new partner, as the talks with Honda have stalled, according to a person with knowledge of the company’s strategy.
Nissan’s search for partners could broaden beyond the automotive sector to technology companies. One possible option is understood to be Taiwan’s Hon Hai Precision Industry, also known as Foxconn, which produces iPhones in China for Apple.
Openness to a Foxconn tie-up among some board members was first reported by the Financial Times and came after the Taiwanese company sparked merger talks between Honda and Nissan with an approach to buy Renault’s stake in Nissan. However, Bloomberg reported that a US tech partner would be preferred.
Nissan’s share price rose by 7.3% on Thursday. Honda’s share price fell by 4%.
The Honda-Nissan merger aimed to create a larger company capable of investing more in the transition to EV technology as traditional manufacturers in Europe and Japan raced to respond to the rising influence of China’s newer electric carmakers. However, the merger would have had to overcome several difficulties, not least the divergence of fortunes between Japan’s second- and third-largest carmakers.
Honda and Nissan both have large production operations, having produced 3.7m and 3.1m cars apiece in 2024. However, Honda is five times larger by market value. Nissan has struggled with years of turmoil and slumping profits. It has been forced to offer big discounts on its ageing product lineup to attract buyers, particularly in its key North American market.
“Nissan’s need for a strong partner remains, but its negotiating position is impaired by its weak profit outlook and stock price,” said Todd Duvick, the head of autos research at the rating agency CreditSights.
He added that it would be understandable for Honda to seek an acquisition, which would “likely lead to a lot more Nissan job losses than a merger, especially at the executive level”.
A takeover rather than a merger would also limit the scope for existing Nissan shareholders to gain from any recovery in the company’s performance. Renault’s shareholding will complicate matters further. It is a legacy of the alliance between Renault, Nissan and Mitsubishi that was masterminded by Carlos Ghosn, the former chief executive who is now living in Lebanon after fleeing arrest in Japan. Nissan endured years of chaos and infighting and chaos after his arrest.
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Nissan’s chief executive, Makoto Uchida, said in November that the carmaker needed to cut 9,000 jobs globally as part of turnaround efforts.
Both Honda and Nissan are due to publish earnings on 13 February. Nissan declined to comment.
A Honda spokesperson said the companies were “advancing various discussions” in order to “establish a direction and make an announcement around mid-February”.