The talks for a merger that could have created one of the largest Japanese automotive groups have officially been terminated. Late last year, Japanese auto giants, Nissan and Honda, had signed a memorandum of understanding (MOU) to enter talks to discuss a possible business integration or merger.

The two companies, along with Nissan’s alliance partner, Mitsubishi, said the companies would discuss the details and reveal the results of that discussion by the end of January. Mitsubishi had announced by late January that it will not participate in the business integration. Now, in the middle of February, the result of those talks have finally been revealed. Unfortunately, both parties have mutually agreed not to integrate. 

Separate ways

Since signing the MOU, the management teams of both companies, including the chief executive officers, have discussed and considered the surrounding market environment, the objectives of the business integration, and the management strategies and structures post-integration. Additionally, taking into account the importance of a business integration, both companies have carefully consulted with various stakeholders.

During the discussions between the two companies, various options were considered regarding the structure of the business integration. Honda proposed changing the structure from establishing a joint holding company, where Honda would appoint the majority of directors and the chief executive officer based on a joint share transfer as initially outlined in the MOU, to a structure where Honda would be the parent company and Nissan the subsidiary through a share exchange.

As a result of these discussions, both companies concluded that, to prioritize the speed of decision-making and execution of management measures in an increasingly volatile market environment heading into the era of electrification, it would be most appropriate to cease discussions and terminate the MOU.

Going forward, Nissan and Honda will collaborate within the framework of a strategic partnership aimed at the era of intelligence and electrified vehicles, striving to create new value and maximize the corporate value of both companies.

In essence, it appears that both parties will go their separate ways but have not ruled out the possibility of collaborating in the area of vehicle intelligence and electrified vehicles. However, they will continue to remain independent brands. This leaves Nissan to explore business integration opportunities with other brands. For now, it has revealed plans to restructure its operations to return to profitability.

No Thai plant closures

Shortly after the announcement, rumors began swirling that Nissan had begun closing factories in an effort to shore up finances. Nissan has since issued an official statement to quell these rumors.

“As part of Nissan's global turnaround measures and ongoing business transformation in ASEAN and Thailand, Nissan is consolidating part of vehicle production in Thailand's Plant #1 to Plant #2 and upgrading the lines starting from Q1 FY2025. This effort aims to optimize fixed costs as well as prepare for future model localization in Thailand. 

Plant line #1 will be closed for vehicle assembly and the facility will be used for body and press shops and operations logistics. 

Thailand will remain a key market for Nissan in Southeast Asia, and the company continue its commitment to grow its business and brand in ASEAN and Thailand markets.”

Fans of Nissan vehicles need not worry as these Thai plants, which manufacture popular Nissan models sold in the Philippines like the Navara and Terra, will continue to operate.