Nissan Dismisses Honda’s Acquisition Attempt and May Permanently Halt Merger | Carscoops

      Multiple reports indicate that Honda is not happy with Nissan's proposed restructuring.

      Honda is skeptical about the effectiveness of Nissan's recovery plan and prefers to have complete control instead.

      While this arrangement might benefit Honda, it seems that Nissan may not agree.

      Nissan could face significant challenges due to tariffs imposed on Canada and Mexico.

      Update: Following reports that Nissan declined Honda's offer to make it a subsidiary, sources familiar with the situation disclosed on Wednesday that Nissan is preparing to abandon $60 billion merger discussions with Honda, as reported by Kyodo News. If finalized, this merger would have formed the world's third-largest automaker. However, the situation is still uncertain—The Washington Post states that no conclusive decision has been made regarding the termination of the merger talks. As developments occur, we will provide updates with new information.

      There is a new development in the prospective merger between prominent Japanese automotive companies Nissan and Honda. After it was suggested that Nissan would need to significantly increase its profits for the merger to be approved, it was revealed that Honda has proposed acquiring shares of Nissan and transforming the struggling brand into a subsidiary.

      Sources with knowledge of the proposal suggest that Honda lacks confidence in Nissan's recovery strategies, believing additional measures are necessary for its revival. This could involve potentially purchasing Nissan shares and establishing it as a subsidiary. However, this plan is anticipated to encounter significant resistance from Nissan.

      Read: Honda and Nissan Postpone Merger Update Until Mid-February

      Analysts suggest that Nissan is concerned this move could jeopardize its independence in the future. Furthermore, Nissan is reportedly against Honda's substantial increase in its management involvement with the brand, according to Nippon.

      Nissan has presented various options for restructuring, including plans to eliminate 9,000 jobs globally and reduce its overall production capacity by 20%. Additionally, it is considering early retirement programs at three of its U.S. facilities. Kyodo News believes Honda is demanding more significant changes from Nissan.

      Finalizing the merger is proving to be a challenge. Carlos Ghosn, former head of Nissan and Renault, has indicated that Honda is being pressured into the merger by Japan's Ministry of Economy, Trade, and Industry, which aims to prevent one of its prominent companies from falling under foreign ownership. Honda has also set Nissan stringent financial targets that must be met for the merger to proceed.

      Carscoops reports that Nissan must generate approximately 400 billion yen ($2.6 billion) in the fiscal year 2026, which is a daunting task. Its operating profit has recently plummeted from 3367 billion yen ($2.3 billion) to just 32.9 billion ($225 million). Additionally, Nissan's net income for the first half of fiscal 2024 has drastically dropped by 93.5% to 19.2 billion yen ($131 million).

      Facing Tariff Threats

      Nissan is also contending with potential tariffs. Although the Trump administration has recently paused proposed 25% tariffs on Mexico and Canada, Nissan could be significantly affected if these tariffs are implemented. Key models, including the Infiniti QX50, QX55, Sentra, Kicks, and Versa, are manufactured by Nissan in Mexico and imported to the United States. Given its already precarious financial state, these tariffs could have serious consequences.

      "The issue is Nissan, which is essentially struggling to make profits in the automotive sector," stated James Hong, head of mobility research at Macquarie, to Reuters. "The longer the tariffs remain in place, I believe it can pose a serious threat to Nissan. Ultimately, if the merger materializes, it could also become a liability for Honda."