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Merger with Honda in Doubt, Nissan Expands Partnership Search

By  |  February 6, 2025

Nissan is reportedly pulling out of merger discussions with Honda as it seeks an alternative partner to aid its transition to electric vehicles, according to The Guardian. The two Japanese automakers had announced in December their consideration of a £46 billion merger alongside Mitsubishi, a deal that would have created the world’s third-largest car manufacturer by annual sales. However, negotiations have faltered amid tensions over the perceived imbalance between the companies.

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    According to The Guardian, Nissan is now exploring alternative partnership options as discussions with Honda have stagnated. The company’s search could extend beyond the automotive sector to include technology firms, with one potential candidate being Hon Hai Precision Industry, commonly known as Foxconn. This Taiwanese manufacturer, best known for producing iPhones for Apple, has previously been linked to industry consolidation efforts. Some Nissan board members have reportedly expressed openness to a Foxconn collaboration, though Bloomberg has suggested that a U.S.-based tech partner might be preferable.

    The uncertainty surrounding the stalled merger discussions has had immediate market implications. Nissan’s share price climbed 7.3% on Thursday, while Honda’s stock declined by 4%.

    Related: Mitsubishi Motors Weighs Options Amid Nissan-Honda Merger Plans

    The proposed Nissan-Honda merger was intended to strengthen both firms’ ability to invest in electric vehicle (EV) development, a crucial step as traditional automakers in Japan and Europe strive to compete with emerging Chinese EV manufacturers. However, significant challenges existed, including the disparity in market value between the two companies. Honda, which produced 3.7 million vehicles in 2024 compared to Nissan’s 3.1 million, is valued at five times Nissan’s worth. Nissan, meanwhile, has been grappling with years of financial struggles, offering steep discounts on older models to maintain sales, particularly in North America.

    Complicating matters further is the influence of Renault, which still holds a stake in Nissan. This relationship stems from the long-standing Renault-Nissan-Mitsubishi alliance, originally orchestrated by former Renault-Nissan chief executive Carlos Ghosn. Following his dramatic arrest and subsequent escape to Lebanon, Nissan endured years of internal discord and instability, leaving the company in a weakened position within the global automotive landscape.

    Source: The Guardian