Nissan CEO tells Honda counterpart he wants to scrap merger talks, source says

The Japanese automakers in December signed a memorandum of understanding to discuss an integration under a holding company to create the world’s No.3 automaker and compete in an increasingly tough industry. However, the talks have been complicated by growing differences, and hit a wall after Honda said it wanted to turn Nissan into a subsidiary. A source with knowledge of the discussions, who declined to be identified, said, “A consensus was reached (on Nissan’s side) that the talks cannot proceed under that proposal.”

Nissan will formalise the decision to withdraw from the MOU at a board meeting to be held before the company’s third-quarter earnings announcement next week. Honda’s current stance is that it would not accept an integration unless Nissan agrees to become a subsidiary, according to Japanese public broadcaster NHK. Both Nissan and Honda spokespeople declined to comment on the status of their talks, repeating earlier statements that they aimed to finalise a future direction by mid-February.

A scrapping of the talks raises questions about how Nissan, which is in the middle of a turnaround plan, can ride out its latest crisis without external help. Nissan has already announced plans to cut 9,000 workers and 20% of global capacity. On Thursday afternoon, Nissan’s shares were up 7.6% while Honda’s were down 3.5%, reversing the direction of their respective moves a day earlier.

— news from Reuters