Nissan Shares Suspended Amid Doubts on Honda Merger

Shares of Japanese carmaker Nissan fell by more than 4% on Wednesday before the Tokyo Stock Exchange suspended trading, after Nikkei newspaper reported that it has called off merger talks with Honda.

The tie-up proposed with its long-time rival would have created the world’s no-3 automaker, but the latest revelation raises questions on how Nissan will turn its business around.

Shares of Honda continued to trade and finished the day up more than 8%, in a sign of apparent investor relief that the deal had been scrapped.

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Honda, Japan’s second-largest carmaker, and Nissan, its third-largest, said last year they were in discussions to merge and create the world’s third-largest automaker by sales, bulking up in an industry that faces a vast threat from China’s BYD and other electric vehicle entrants.

But the talks have been complicated by growing differences on both sides, according to two people familiar with the matter, both of whom declined to be identified because they were not authorised to speak to the media.

Reuters earlier reported Nissan could call off the talks. As of late afternoon, its board was still meeting to decide on the course of action, a person with knowledge of the matter said.

‘Did not want to be a Honda subsidiary’

Honda had sounded out Nissan about becoming a subsidiary, one of the people said, adding that such an arrangement was a departure from the spirit of discussions originally framed as a merger of equals.

A Nissan spokesperson said the Nikkei report was not based on information announced by the company and that it aimed to finalise its future direction by mid-February and would announce it at that time.

A Honda spokesperson said it had not heard anything from Nissan about a decision to withdraw from their memorandum of understanding to work on a merger.

The development raises fresh questions about how hard-hit Nissan could ride out its latest crisis without external help. Nissan is in the middle of a turnaround plan, aiming to cut 9,000 employees and 20% of global capacity.

Honda, with a market value nearly five times bigger than Nissan, was increasingly worried about its smaller rival’s progress on the turnaround plan, said the other person.

Threat of US-Mexico tariffs

The tie-up talks have coincided with the disruption posed by potential tariffs from US President Donald Trump. Tariffs against Mexico would be more painful for Nissan than for Honda or Toyota, according to analysts.

“Investors may get concerned about Nissan’s future (and) turnaround,” Morningstar analyst Vincent Sun said.

“Nissan also has a larger risk exposure to US-Mexico tariffs than Honda and Toyota.”

Nissan has been hit harder than some other carmakers by the shift to EVs, having never fully recovered after years of crisis sparked by the arrest and removal of former chairman Carlos Ghosn in 2018.

“The news saying that Nissan did not want to be a Honda subsidiary appears to highlight that control was a contentious issue,” said Christopher Richter, Japan autos analyst at brokerage CLSA.

“Without being able to have control, Honda appears to be walking away.”

Nissan’s long-term alliance partner Renault had said it would be open in principle to the merger with Honda. The French automaker owns 36% of Nissan, including 18.7% through a French trust.

Nissan and Honda had initially said they planned to decide the direction of the integration by the end of January, but that was later pushed back to mid-February.

Sources told Reuters last month that Nissan’s smaller alliance partner Mitsubishi Motors, which had considered joining the merger, might not do so.