At a press conference in Tokyo on February 13, Honda (HMC) CEO Toshihiro Mibe announced that the automakers' discussion with fellow Japanese rival Nissan (NSANY) had fizzled approximately two months after they began.
In a joint statement released the same day, Honda acknowledged that it proposed to divert from its original intention of forming a joint holding company to one where "Honda would be the parent company and Nissan the subsidiary through a share exchange."
"As a result of these discussions, both companies concluded that to prioritize speed of decision-making and execution of management measures in an increasingly volatile market environment heading into the era of electrification, it would be most appropriate to cease [merger] discussions," the two automakers said.
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Additionally, Mibe admitted that Honda's proposal to buy out Nissan and operate it as one of its subsidiaries was too ambitious and risky.
"We anticipated that our proposal of share exchanges would be quite a difficult decision for Nissan, and we considered that a possibility that the agreement might be withdrawn," Mibe said.
However, a new report suggests that the stalled discussions aren't over yet but rest on one condition that may prove devastating to Nissan.
Honda is willing to negotiate with Nissan, not its CEO
As per a new report by the Financial Times, unnamed sources close to Honda HMC noted that the makers of the Civic and CR-V are willing to resume merger negotiations if Nissan CEO Makoto Uchida steps down from his position.
According to the report, the embattled Nissan figurehead is fighting a battle from two sides. A source who talked to FT noted that Uchida faces mounting pressure both internally and at Nissan's parent company, Renault, to leave the company before his contract with the automaker expires in 2026.
They added that Nissan’s board of directors has also begun discussing the timing of his exit informally.
“If discussions about business integrations arise again, we will not completely rule out the possibility of resuming the discussions,” Honda told FT.
In remarks before its earnings presentation on February 13, Uchida said that Nissan's board of directors recognized the ballsy nature of the move, which could rip away Nissan's decision-making abilities from it.
“We were not confident that our autonomy would be preserved or that Nissan’s potential would truly be maximized,” Uchida said. “I had doubts whether it would be successful.
According to another source who spoke with FT, Honda is willing to revive merger negotiations with a Nissan CEO who is more effective at managing internal opposition.
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The buck stops at Hybrids, Nissan exec says
The landmark Honda/Nissan merger talks started to splinter after Honda suggested that Nissan become a subsidiary of Honda, a huge departure from what they initially agreed upon when they signed a memorandum of understanding in December 2024.
In a recent report by The Japan News, the English-language site of The Yomiuri Shimbun business newspaper, a senior Nissan exec noted that there was much more than what's at surface level.
Apart from Honda demanding Nissan become its subsidiary, the rival automaker took additional shots at Nissan's pride.
The exec noted that Honda asked Nissan to abandon the development of a technology it had been working on for years: its own unique hybrid powertrain system called e-Power, in favor of equipping Nissan cars with Honda's own hybrid engines.
Nissan says that cars equipped with its e-Power system 'behave like EVs,' as it uses a series-hybrid setup not used by Honda and rival Toyota (TM) . While Toyota Priuses and Honda's Accord hybrids have gas engines and electric motors under the hood, Nissan says its hybrids 'act like EVs.' The gas engine in Nissan's e-Power system is a generator for batteries that power an electric motor.
Notably, Nissan lags far behind its rivals in hybrid vehicle sales. In fact, the automaker currently does not sell any hybrid vehicles in the U.S. Currently, it is hard at work preparing its system for the US-market Rogue e-Power, which is slated for a release sometime during its 2026 fiscal year.
Related: Nissan announces big cuts after Honda debacle
Nissan faces dire financial situation, still seeking outside help
Nissan still faces financial pressure that it seeks to resolve. According to the FT, the automaker has allegedly approached outside investment from tech companies and private equity for capital injections.
Taiwanese electronics giant Foxconn (FXCOF) is one potential partner. Recently, the contract manufacturer of Apple's (AAPL) iPhones sent one of its top executives to talk with the automaker's bigwigs.
Its chairman, Young Liu, expressed that "cooperation" with Nissan is the only business act they aim to pursue.
"We did have talks about acquiring a stake in [Nissan]," Liu said in remarks. "If [taking a stake] is necessary for cooperation, we will consider it, but buying shares is not our main goal. Our main goal is cooperation."
But what is confirmed is that Nissan's sales and revenue are in the red, which is prompting Uchida to take drastic measures.
Nissan is attempting to save $2.59 billion by its 2026 fiscal year, and it is preparing to do that by cutting 6,500 jobs in addition to job cuts affecting 9,000 jobs last November. It has also reiterated its decision to reduce global production capacity by 20 percent for the 2026 fiscal year.
The Nissan Motor Company trades on OTC markets in the United States as NSANY and on the Tokyo Stock Exchange under the ticker number 7201.
The Honda Motor Company is listed on the New York Stock Exchange under the ticker HMC.
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