How Nissan's Pride Derailed a $60 Billion Merger with Honda

The largest potential merger in the automotive industry, which could have brought Nissan and Honda together as a unified giant to compete with Chinese electric vehicle manufacturers, fell apart due to Nissan's steadfastness and Honda's review of the terms, reports NewsBox.

According to Reuters, Honda proposed a merger to Nissan, who was facing challenges from declining sales and management instability, worth $60 billion at the end of last year. However, negotiations reached an impasse within just a month.

Sources familiar with the situation report that Nissan, which had long been Japan's second-largest automaker, insisted on equal footing in the talks, despite its weakened position and underestimation of the demand for hybrid cars in the U.S.

Meanwhile, Honda put pressure on Nissan, demanding further cuts to its workforce and production capacity. In response, Nissan resisted the politically sensitive closure of plants, believing it could independently overcome its difficulties.

This steadfast attitude, combined with what Honda's management saw as a reluctance to make decisive decisions, led to the deal's collapse. Ultimately, Honda's proposal for Nissan to become a subsidiary was the final straw.

Julie Boot, an analyst at research firm Pelham Smithers Associates, stated, "I think it's a management issue. They are completely overestimating their situation, the value of their brand, and their ability to turn the business around."

Nissan and Honda declined to comment on the negotiation details. However, Nissan CEO Makoto Uchida announced last week his desire to end discussions following Honda's proposal for the creation of a subsidiary. Both automakers promised to provide an updated statement later this month.