How Nissan Lost Its Status as Honda Equal

Nissan's Decline: Failed Merger with Honda and Market Struggles

By Miyoung Kim

SINGAPORE (Reuters) - Japan's Nissan Motor is open to working with new partners including even technology firms after merger talks with cross-town rival Honda Motor foundered, people familiar with the automaker's thinking have said.

The pair were on course to create the world's fourth-biggest automaker with annual production of nearly 7 million vehicles, just behind compatriot Toyota Motor, Germany's Volkswagen and South Korea duo Hyundai Motor and Kia, according to 2024 sales data.

Nissan backed out after Honda proposed making its struggling peer a subsidiary, another person said.

Nissan suffered a bruising sales slump in the U.S. and China - two of its biggest markets - and last year responded with a turnaround plan involving job cuts and capacity reduction.

Tumbling profit has tightened liquidity, constraining electrification efforts necessary to fend off competition from BYD and other Chinese rivals which have upended the global auto market with cheap electric vehicles.

Nissan has been burning rather than generating cash since the financial year that ended in March 2024 due to heavy capital spending and shrinking profit. It also has around 1 trillion yen ($6.58 billion) of bonds maturing in the next two years, or around 43% of its total outstanding bonds, LSEG data showed.

Nissan has been hit harder than others by the EV shift having never fully recovered from years of crisis sparked by the 2018 removal and arrest of former chairman Carlos Ghosn.

Its market capitalisation is now five times smaller than that of Honda, which is about 7.6 trillion yen. A decade ago, the pair were both worth around 4.6 trillion yen.

Nissan's share price has fallen nearly 30% over the past 12 months. Last year, it fell below 400 yen - the price French partner Renault valued the stock at to increase its stake in the Japanese automaker in 2002.

The price recovered in December after Nissan and Honda announced tie-up talks and was at 443 yen on Monday.  

($1 = 151.9900 yen)

(Reporting by Miyoung Kim; Editing by Christopher Cushing)