Talks between Honda and Nissan fall off the rails as Nissan reportedly withdraws from MOU due to leadership concerns
Nissan’s talks with Honda reportedly entered a death spiral over managerial concerns in the combined entity.
Talks between Nissan and Honda have been ongoing for months, with the two automakers attempting to join forces in a merger to become the third biggest automaker in the world. After a brief honeymoon phase, talks rapidly began hitting obstacles with Honda not only asking Nissan to buy out current partner Renault, but to also submit to a merger where Honda, not Nissan, would have the leadership role and the authority to make the bulk of the decisions in the fully merged company.
Yesterday, we highlighted some of the key challenges that the two companies were facing, but in less than 24 hours, it appears the talks have now entered a death spiral with Nissan reportedly pulling out of the agreement it signed with Honda citing concerns about its authority and leadership in the merger.
Nissan’s rebellious nature frustrates Honda
Nissan went so far as to reportedly terminate its end of the MOU due to Honda’s demands.
Nissan and Honda first entered talks in December with the two companies signing an MOU agreement to begin exploring the possibility of a merger between the two firms. However, it became very clear that Honda wanted to use all of the leverage it had as the larger company in the merger and was already using some of this clout to get Nissan to not only buy out the shares of Renault, but to also move faster on its internal restructuring plans.
These demands ruffled the feathers of execs within Nissan and according to the report from Japanese publication Nikkei this anger grew when it was revealed Honda wanted to not only take a large stake of Nissan stock for itself, but to also morph the company into a subsidiary of the Honda empire. These changes would also have included Honda getting seats on Nissan’s board of directors and to appoint a new CEO. This was reportedly the last straw for Nissan with the report indicating the smaller company terminated its MOU with Honda. If that’s the case, this would be a potential death blow to the merger and would deprive Nissan a potential rescue. This rebellious streak from Nissan is nothing new and even current partner Renault has also been frustrated at times with the company’s resistance when it attempted to bring Nissan closer to its corporate umbrella during the early years of its partnership with the company. Honda has also been frustrated with the pace of Nissan’s restructuring plans despite the progress the company has made in recent months.
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Honda and Nissan say everything is fine, but is it?
Honda and Nissan say everything isfine and talks are ongoing but signs suggest all is not well.
For their part, neither Honda nor Nissan have issued comments on the reports themselves with both firms saying this report and others were not based on official announcements. Both automakers assert that discussions are proceeding forward and that the two firms will provide an update by the middle of February.
While the two companies are doing their best to do damage control and say everything is fine, there are other signs otu there that suggest things are anything but fine. Mitsubishi was invited to join in the alliance but the company has taken a methodical approach to the talks saying that it would potentially leave its existing alliance with Nissan if the merger were to be made official citing some of the same leadership concerns as Nissan while also wanting autonomy to continue operating in key markets like Southeast Asia.
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