Honda and Nissan officially terminate tie-up talks
Just 51 days after the MOU was signed, the Nissan-Honda deal is off
The proposed collaboration between Honda and Nissan has been terminated after the two companies failed to reach an agreement on how to proceed with the merger. In a short press release issued today, it was confirmed that both companies ‘agreed to terminate the MOU signed on December 23 last year for consideration of a business integration.’
Sadly, it isn’t much of a surprise, rumours having swirled around the deal for weeks now that neither party was tremendously happy with what the other was proposing. Honda wanted more control of an ailing Nissan, Nissan didn’t want interference again after the whole Renault saga, and on it rumbled.
Officially the proposal from Honda was to become a parent company of Nissan, as opposed to the original joining holding company idea where Honda would appoint most of the important people. You can probably imagine how the idea of Nissan being fully taken over by Honda was received. The former was to become a subsidiary of the latter through a share exchange, which is probably the point where the whole thing went off the rails. To be a fly on the wall in those discussions, eh?
The joint release today is of course reasonably diplomatic, the suggestion being that ‘to prioritize speed of decision-making and execution of management measures in an increasingly volatile market environment heading into the era of electrification’, the Memorandum of Understanding is being junked. All back to square one, then, which from the outside doesn’t seem to benefit either company. Both Honda and Nissan urgently need more competitive and desirable products, and a joint effort in that regard has more potential than going it alone. But then we’re also not titans of industry, so there must be some light visible at the end of the tunnel for those at the top.
Furthermore, despite a split so soon after the initial agreement, it’s claimed that Honda and Nissan ‘will collaborate within the framework of a strategic partnership aimed at the era of intelligence and electrified vehicles’ - so there might be some crossover on crossovers in time. Nissan, moreover, has issued a separate release today, outlining the progress of its ‘comprehensive turnaround measures.’
They’re punchy, for sure. It wants to save 400 billion yen (or £2bn) ‘through a wide range of initiatives’ as well as reduce its break-even point to 2.5 million vehicles (from 3.1m) by the 2026 financial year for a ‘stable operating margin of four per cent’. Linked to that is a desire to make production of 3.5m units possible, plus it will ‘actively explore new partnerships’ to clamber out of this rut. Just not with Honda. There will be job cuts as well, totalling 6,500, in production and powertrain plants this year and next - the United States and Thailand will be affected. It goes all the way to the top, in fact, with senior management positions being reduced by 20 per cent.
Inevitably the cars will feel the pinch as well. Nissan wants to save 60 billion yen (just over £300m) through ‘adjusting model performance and content’ across its six major global products. It wants to be more efficient, basically, streamlining every bit of the business to be leaner and less wasteful. Desperately needed plug-in hybrids are promised very soon, in addition to a new Leaf and compact EV.
Nissan president and CEO Makoto Uchida said: "Nissan is fully committed to its turnaround actions, aiming to reduce costs by around 400 billion yen. We are dedicated to achieving a more efficient cost structure while driving top-line growth through enhanced competitive products that cater to the diverse needs of our customers. We are executing our turnaround—centered on efficiency and growth—with pace and purpose.” It says that the measures are already being implemented, and an update is expected within a month.
There must be a more viable Chinese takeover (I nearly typed ..away! - Freudian slip?) option somewhere for Nissan.
Not sure how politically acceptable that might be.
Perish the thought!
It's not as if Honda isn't bad enough these days, if the dependability studies are to be believed.
But it's just impossible to see what Nissan could have brought to the table; they are even struggling in the USA, which is Honda's most important market already.
And Mitsubishi was just the hangover without the party the night before.
Given that there are a few Chinese cars based on old Mazdas (and they are now quite respectable in their own right) one can see the threat.
Why not fill the spare capacity with Chinese EVs
We need to wake up to the fact that the CCP is pulling the strings of Chinese industry and is doing so in a way that undermines the relatively free market based rest of world and start acting in co-ordinated ways to protect an independent industrial base in the countries that over the post WW2 period have reached alignment in the way they wish their economy to function.
This is not an anti China point per se, its just a recognition that if you are following a set of rules around private capital, free market etc and an actor enters who is not then it's very easy for that actor to completely destroy the game you have created. It's basically why state aid rules have existed in the EU.
Honda rightly should have been the senior of the two in any organisation merger. However losing face is a massive deal in Japan. Which is why I’d expect Nissan management to let it go under before they’d allow it bought by a Chinese company.
The Renault, Alpine, Dacia product line up is more appealing than Nissan’s UK/EU offerings IMO.
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