Official: Nissan-Honda Merger Axed, Mitsubishi Out Too, Nissan Enters ‘Survival Mode’

It's official: the Nissan-Honda-Mitsubishi merger first proposed and announced back in Dec 2024 will NOT proceed as Nissan and Honda cannot come to an agreement. Separately, Mitsubishi Motors also confirmed their exit from said merger proposal.

It’s officially official: Nissan and Honda have jointly announced that both firms have agreed to terminate talks for their planned merger announced back in Dec 2024. The move also means potential third member Mitsubishi Motors are also out.

As revealed by insiders prior leading up to yesterday’s official announcement, both Honda and Nissan reached an impasse impossible to overcome. In fact, both parties acknowledged that Honda sought to make Nissan a subsidiary, to which the latter party fiercely disagrees with.

Besides that, insiders also shed light on some of the other conditions put out by Honda that were difficult for Nissan to meet. Amongst them were calls for Nissan to triple its profits in a span of roughly just one fiscal year, as well as buying back shares from alliance partners Renault.

Had this merger proceeded, industry experts reckon it would’ve crated the world’s fourth largest automotive group worth around US$60 billion (approx. RM266.43 billion). Perhaps it would’ve also met its main goal of strengthening each other against stiff Chinese competition.

Despite terminating merger talks, all three firms did confirm that existing collaborations between all three firms, most notable being their joint development of electric vehicles front, will continue.

While a merger isn’t happening, Honda, Nissan, and Mitsubishi jointly said that they will continue collaborating “within the framework of a strategic partnership focused on the era of intelligent and electrified vehicles (EVs).”

Evidently, with the proposed merger plans abandoned, Nissan has reportedly placed itself in ‘Survival Mode’. The firm has begun executing a new business strategy that involves cutting costs by the billions and renewing its urgency to secure a new partner.

The effort sees Nissan targeting a savings worth ¥400 billion (approx. RM11.5 billion) during the 2026 fiscal year, and the firm says it will achieve which through “headcount reductions and production efficiency measures.”

Nissan is reported to be in 'Survival Mode' now as it implements a series of cost and job cuts.

Three-quarters of said savings will come from reducing fixed costs. Nissan is also set to axe 2,500 indirect jobs for 1,000 new ones via shared service centres. Nissan will also consolidate its two North American production lines and reduce staff at its Thailand plant by 6,500 over two years.

An estimated ¥100 billion (approx. RM2.887 billion) in savings are set to come from shortening new vehicle development time, streamlining product line-ups, producing simpler parts, and scuttling supply chain inefficiencies.

Altogether, Nissan has downgraded operating profit expectations for 2024 from ¥150 billion (approx. RM4.3 billion) to ¥120 billion (approx. RM3.46 billion) due to slow sales. This is already a reduction form ¥500 billion (approx. RM14.39 billion) initially expected back in Nov 2024.

Taiwanese tech giants Foxxcon have emerged to be a strong potential to become a new partner for Nissan.

Nissan CEO Makoto Uchida (left) admits that it will "difficult to survive" without leaning on future partnerhsips.

“It will still be difficult to survive without leaning on future partnerships,” admitted Nissan CEO Makoto Uchida. The exec continued further in noting that Nissan will “conduct a strategic review to actively explore new partnerships.”

One potential partner could be Taiwanese tech giants Foxxconn. Though initially rumoured to have interest in acquiring the ailing Japanese automaker, its chairman Young Liu recently came out and admitted it seeks cooperation instead of acquisition.

For now at least, Nissan has geared itself up for the rough road ahead. How long this lasts greatly depends on how quickly it can secure a new partner that can bring in a much needed and sizeable injection of capital funds.