A few weeks ago we published what was one of the largest and most unexpected moves in the automotive industry: Nissan and Honda were going to merge to face the Chinese threat and their cheap electric cars. Nissan was in serious trouble at the end of last year when its rival Honda offered it a lifeline: a $60 billion alliance that would help both Japanese car manufacturers compete against Chinese brands and revolutionize the automotive industry. Years of wavering sales and management turmoil had left Nissan weakened, especially after […]
A few weeks ago we published what was one of the largest and most unexpected moves in the automotive industry: Nissan and Honda were going to merge to face the Chinese threat and their cheap electric cars.
Nissan was in serious trouble at the end of last year when its rival Honda offered it a lifeline: a $60 billion alliance that would help both Japanese automakers compete against Chinese brands and revolutionize the automotive industry.
Years of wavering sales and turmoil in management had left Nissan weakened, especially after underestimating the demand for hybrids in the U.S., its main market.
But the merger talks fell apart in just over a month due to Nissan’s pride and insufficient alarm about its difficult situation, as well as Honda’s abrupt decision to revise the terms and propose that Nissan become a subsidiary, according to six people familiar with the matter.
Nissan with its pride and Honda with its disdain
Nissan, which for years until 2020 was the second largest car manufacturer in Japan behind Toyota, insisted on receiving almost equal treatment in negotiations despite its weaker position, three of the people said.
Honda pressured Nissan to make deeper cuts to its workforce and factory capacity, but Nissan was not willing to consider politically sensitive factory closures, three sources said. They were left with the impression that Nissan believed it could recover on its own, despite its growing difficulties.
This intransigence, combined with what Honda’s management considered a slow decision-making process on Nissan’s part, contributed to undermining an agreement that would have created one of the largest car manufacturers in the world, three people said.
The story is based on interviews with Reuters with more than a dozen people, all of whom spoke on condition of anonymity due to the sensitivity of the topic. In summary, Nissan did not want to be a subsidiary and Honda was not willing to improve the deal.
Author: Chema Carvajal Sarabia
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