The "marriage" is officially off! Honda and Nissan announce the abandonment of merger talks and promise to continue cooperation

On February 13, Honda and Nissan officially announced the end of their merger talks, which means that the collaboration plan that could have created one of the world's largest automakers has been terminated.

Analysis indicates that for Nissan, the consequences of this merger failure may be particularly severe. Given its currently weak financial situation, Nissan must now seek other avenues for survival. In November last year, Nissan announced a 94% plunge in net profit for the first half of the year and planned to lay off 9,000 employees, reduce production capacity by 20%, and lower its full-year profit forecast by 70%. Frequent leadership changes and an aging product line have weakened its market competitiveness.

An earlier article from Wall Street Journal mentioned that insiders revealed Nissan is seeking new partners and hopes that the new allies will come from the American technology industry. However, due to significant price cuts caused by an aging product line, which severely eroded profits, this precarious financial situation is unlikely to attract many potential "white knights."

In contrast, Honda's situation is relatively better. Thanks to a rebound in the U.S. market, which offset the impact of weak sales in Japan and Southeast Asia, Honda's net sales for the third quarter reached 5.5 trillion yen, exceeding market expectations. Honda maintained its full-year profit forecast, still expecting operating profit for the fiscal year to reach 1.42 trillion yen.

The company also plans to increase hybrid vehicle sales to 1.3 million units by 2030, doubling from 650,000 units in 2023.

It is noteworthy that the breakdown of the merger talks comes nearly three months after the initial reports surfaced. At that time, one party hoped to enhance competitiveness in the rapidly changing global automotive industry through economies of scale, while the other sought financial assistance. According to insiders cited by Bloomberg:

"In the early stages of negotiations, Honda insisted that Nissan must first reorganize internally before advancing the deal. However, Nissan believed that it could turn things around without closing any factories."

Some analysts pointed out that if the merger had been successful, it would have split the Japanese automotive industry in two, and globally, it could have allowed the new alliance to better compete with traditional overseas brands.

However, although the plan to integrate the two major brands into a single holding company has fallen through, both parties stated that they will continue to maintain a strategic partnership with Mitsubishi Motors, collaborating in areas such as batteries, autonomous driving, software, and electric vehicle technology.