BROKEN DOWN
Iconic car brand ‘on brink of collapse’ AGAIN as dramatic ‘merger’ talks with huge rival firm are called off
Its board was still meeting to decide on the course of action
AN ICONIC car firm is again on the brink of collapse after talks to merge with a rival company broke down.
Nissan is facing a make-or-break 12 months and reportedly could go under without much-needed support.
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It comes after a Nissan official said the firm has "12 or 14 months to survive" and was likely to endure "tough" months ahead.
The firm has already cut 9,000 jobs across its global operation, while its CEO Makoto Uchida took a 50% pay cut in an economy drive.
The Japanese car makers were in discussions to merge with Honda - and thus create the world's third-largest automaker by sales.
The move would have seen Honda make a dramatic return to the UK, having closed its manufacturing plant in 2021.
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Nissan and Honda would have used each other's plants to build vehicles and create manufacturing capabilities that would rival Tesla.
But the talks have been complicated by growing differences on both sides, according to reports.
Both of whom declined to be identified because they were not authorised to speak to the media, the Nikkei newspaper said.
As of late afternoon, its board was still meeting to decide on the course of action, a person with knowledge of the matter said.
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Honda had sounded out Nissan about becoming a subsidiary, one of the people said, adding that such an arrangement was a departure from the spirit of discussions originally framed as a merger of equals.
A Nissan spokesperson said the Nikkei report was not based on information announced by the company and that it aimed to finalise its future direction by mid-February and would announce it at that time.
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A Honda spokesperson said it had not heard anything from Nissan about a decision to withdraw from their memorandum of understanding to work on a merger.
The development raises fresh questions about how hard-hit Nissan could ride out its latest crisis without external help.
Nissan is in the middle of a turnaround plan aiming to cut 9,000 employees and 20 per cent of global capacity.
Honda, with a market value nearly five times bigger than Nissan, was increasingly worried about its smaller rival's progress on the turnaround plan, said the other person.
The tie-up talks have coincided with the disruption posed by potential tariffs from newly-elected US President Donald Trump.
Tariffs against Mexico would be more painful for Nissan than for Honda or Toyota, according to analysts.
"Investors may get concerned about Nissan's future (and) turnaround," said Morningstar analyst Vincent Sun.
"Nissan also has a larger risk exposure to US-Mexico tariffs than Honda and Toyota."
Shares in Nissan slid more than 4 per cent before trade was suspended by the Tokyo Stock Exchange following the report.
Shares of Honda continued to trade and finished the day up more than 8 per cent, in a sign of apparent investor relief that the deal had been scrapped.
Shift to EVs
Nissan has been hit harder than some other carmakers by the shift to EVs having never fully recovered after years of crisis sparked by the arrest and removal of former Chairman Carlos Ghosn in 2018.
"The news saying that Nissan did not want to be a Honda subsidiary appears to highlight that control was a contentious issue," said Christopher Richter, Japan autos analyst at brokerage CLSA.
"Without being able to have control, Honda appears to be walking away."
Nissan's long-term alliance partner Renault had said it would be open in principle to the merger with Honda.
The French automaker owns 36 per cent of Nissan, including 18.7 per cent through a French trust.
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Nissan and Honda had initially said they planned to decide the direction of the integration by the end of January, but that was later pushed back to mid-February.
Last month Nissan's smaller alliance partner Mitsubishi Motors, which had considered joining the merger, might not do so.
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