9:31 am, February 20, 2025
The proposed merger between Honda and Nissan which hit the dust last week would have created the world’s fourth-biggest automaker. The shotgun marriage was set in motion after a struggling Nissan was spooked by reports of Foxconn looking to take a stake in it as part of a proposed shift into EVs.
But the Nissan-Honda merger talks quickly fell apart, after Honda proposed a complete takeover. Nissan bosses had wanted a merger of equals despite being in a much weaker position than Honda. They may need to think again.
That seemed like the end of it until an interesting report in the FT this week which reckoned that Honda could still resume takeover talks if Nissan’s chief executive officer Makoto Uchida resigns.
The embattled Uchida wants to go at the end of next year but appears to be rapidly running out of road. It looks like Renault (which has a 36% stake in Nissan directly or via its trust) is pressing for him to go, as are other Nissan board members. Uchida getting the push could then reopen merger or takeover talks with Honda.
And it is Nissan which needs the tie-up more than Honda. Nissan messed up its strategy big time in the key markets of the United States and China, and hasn’t had a range of hybrids available in the right markets. That was a big failure, especially given that the firm ironically has a stake in Mitsubishi. The latter is big on hybrids.
With profits and its share price both down markedly last year, Nissan announced that it was embarking on a drastic cost-cutting strategy, looking to shed 20% of capacity and 9,000 jobs worldwide. The firm even warned that it had just 12 to 14 months to turn things around. Meanwhile Nissan’s ex partner Renault is looking to offload its stake.
It is difficult to see how Nissan can survive on its own without a partner. It is vulnerable to potential takeover and could even be broken up by a private equity firm which could sell off chunks at a profit. Chinese buyers for example might be attracted to its plants in the US and EU in a global economy increasingly characterised by tariffs. Nissan itself has said that it wants a stable anchor investor.
That might still be Honda.
Whether that is enough is a big question, however. Honda has also been struggling to develop new EVs, with both firms falling behind Chinese rivals. A merger or takeover might pool resources, give scale and help reduce costs, but could also require a tie-up with a Chinese EV maker or tech company to help speed up EV development. A potential Foxconn-Nissan-Honda tie-up might offer the best hope, if Nissan executives can get their heads round it.
Where does this leave the Nissan plant in Sunderland? Firstly, it still isn’t clear where the cost-cutting axe at Nissan will fall and whether this will affect Sunderland. The plant is super efficient when running at full capacity but has been running well below that in recent years.
A tie-up with Honda could bring a boost for the plant, and see Sunderland making Nissan, Honda and Mitsubishi models off the same platforms, helping to boost output at the plant. Honda had previously assembled cars at Swindon but shut its plant in 2021. So a merger or takeover could see Hondas made in the UK again, this time at Sunderland. That would be a boost for Sunderland and UK auto.
Another boardroom struggle looks likely at Nissan. The outcome of that could determine whether the tie-up with Honda gets going again. Failing that, Nissan will urgently need to find another partner to survive.
What happens next could have major implications for Sunderland.
