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Honda-Nissan he finished: the merger ended because both want to be in charge

The Honda-Nissan merger, which aims to save the latter from bankruptcy with the former's money, is under threat. As expected, Honda does not trust Nissan's management skills, but both want to be in charge.

There is beginning to be some agreement between Renault and Honda regarding Nissan's ability to manage itself and avoid deficits that could jeopardize its survival. In 1999, after saving a Nissan buried in debt from bankruptcy, Renault created an Alliance in which it led, but did not have full management power, requiring the Japanese's agreement on strategic issues, which according to the French limited the consortium's efficiency. When it tried to evolve the Alliance agreement into a Group, for greater integration, Nissan created the Ghosn “incident” so as not to lose the share it still held in the company's control, which ended up making it unmanageable. About to be saved, this time by its fellow countryman Honda, Nissan is once again opposing the loss of control, which Honda finds unacceptable, especially after seeing what happened to the French.

With both manufacturers wanting to control the company resulting from the Honda-Nissan merger, negotiations between the two are complicated in order to prevent Nissan from going bankrupt — for the second time in 25 years, and this new crisis for the Japanese brand comes just six years after Renault's retreat. The potential marriage between the Japanese couple is heading for divorce, just two months after they started dating. According to the New York Times, the breakup was due to Honda's express desire to avoid future problems, removing Nissan's control and relegating its partner in the merger to the position of a subsidiary brand. In other words, Honda would be in charge of the holding company that was to be formed. 

Honda's decision to subordinate Nissan in management came after the analysis that the cash-rich Japanese manufacturer requested of the restructuring plans announced by the debt-ridden Japanese manufacturer. For the merger to go ahead, Honda imposed as a condition that changes be made at Nissan that would make it profitable, which the latter guaranteed with layoffs and factory closures to reduce costs. But probably because it did not trust Nissan's plans, at least not as much as its own analysis, Honda decided to force the hand and make the conditions for the merger even more demanding, an operation that the brand's management never wanted in the first instance.

With annual production of more than 4 and 3 million vehicles, respectively for Honda and Nissan, the merger is essential for Nissan's survival, but it could be equally useful for both, at a time when neither brand has a “composite” range of electric vehicles and both need to rapidly develop their battery-powered vehicles.

According to sources close to both manufacturers, negotiations between Honda and Nissan are ongoing, but few believe they will succeed. It is true that after the news of the near collapse of negotiations was made public, shares in the “distressed” Nissan fell 5%, while Honda shares rose 8%, but given the exposure of Japanese banks to Nissan's situation and the Government's interest in guaranteeing jobs, they too should have a say.

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