Nissan Motor is considering forging new partnerships, including potential collaborations with technology companies, following the breakdown of merger talks with cross-town rival Honda Motor. The two companies had been in discussions to form the world’s fourth-largest automaker, producing nearly 7 million vehicles annually. However, Nissan ultimately pulled out after Honda proposed making the struggling automaker a subsidiary, sources familiar with the matter said.
Nissan has been grappling with a significant sales slump in its key markets, the U.S. and China, and has been forced to implement a turnaround plan that includes job cuts and capacity reductions. The company has faced mounting financial challenges, including a sharp decline in profits and liquidity constraints, making it difficult to invest in electrification efforts. This is particularly concerning as the global automotive market shifts toward electric vehicles, with competitors such as BYD and other Chinese automakers offering affordable electric options that have disrupted the industry.
In the financial year ending March 2024, Nissan has been burning cash due to high capital expenditure and shrinking profits, while also facing the looming maturity of approximately 1 trillion yen ($6.58 billion) in bonds over the next two years. This financial pressure has been exacerbated by the company’s failure to recover from the crisis triggered by the 2018 removal and arrest of former chairman Carlos Ghosn.
Nissan’s market capitalisation has significantly shrunk, now standing at just one-fifth of Honda’s, which is valued at approximately 7.6 trillion yen. Over the past year, Nissan’s stock price has dropped nearly 30%, though it saw a slight recovery in December following the announcement of merger talks with Honda. As of Monday, Nissan’s shares were priced at 443 yen.
The breakdown of the merger talks leaves Nissan seeking alternative avenues for growth, including potential collaborations with tech companies, which could provide the resources and innovation needed to stay competitive in the rapidly changing automotive landscape.
