Honda open to resume Nissan merger talks, but only if Nissan CEO Makoto Uchida resigns – report

In a startling vote of no confidence, Honda is open to restarting merger talks with Nissan, but only if the latter’s CEO Makoto Uchida resigns from the company. That’s according to at least one insider, reports CarExpert citing Financial Times.

The two companies, along with Nissan’s alliance partner Mitsubishi, signed a memorandum of understanding (MoU) exploring the possibility of a merger in December, but the proposed partnership fell apart just two months later. Nissan alleged that Honda reneged on an earlier-agreed management structure and wanted the former to become a subsidiary, instead of both firms being equals under a joint holding company.

Meanwhile, Honda was reportedly frustrated with Nissan’s lack of speed in turning its business around and the sheer financial hole it was in. Honda’s CEO Toshihiro Mibe had previously said that Nissan’s restructuring was a key “prerequisite” of the merger.

Not only is Uchida a persona non grata at Honda, but the embattled executive is also apparently facing pressure from his own board as well as Renault, another alliance partner. He was the bearer of bad news last week when he announced even worse financial results last week, just a day after the Honda talks fell through.

Among this is further reduction in its annual operating income forecast from 150 billion yen (RM4.4 billion) to 120 billion (RM3.5 billion) – a far cry from the 500 billion yen (RM14.5 billion) it originally projected. This contributes to a net loss forecast of 80 billion yen (RM2.3 billion) for the 2024 fiscal year.

In response, Uchida revealed a sweeping set of reforms, including cutting a total of 9,000 jobs, reducing production capacity and even closing plants – such as one in Thailand. It’s hoped that this will save 400 billion yen (RM11.5 billion) by the end of the fiscal year 2026. But even that, he said, may not be enough to save the company, and a search for a new partner remains ongoing.

Speaking to reporters, Uchida said: “Can we continue to survive as a standalone company? We’ve been discussing that for some time now. This is a big subject matter. Without taboo, we have to explore all options.”

Despite this increased pressure, Uchida said he will not leave the company without turning Nissan around. “My responsibility is truly significant…[but] stepping down without any improvement is irresponsible. It’s not my intention to hang on to this position,” Financial Times reported him as saying.

While the disagreement in Nissan’s role in the merger (and Uchida being a key player) remains a stumbling block in the merger, the company’s close relationship with Mitsubishi is reportedly a strong draw, given the latter’s strength in Southeast Asia and its plug-in hybrid technology despite being the smallest of the trio. Had it gone through, the merger would have created the world’s third-largest carmaker, behind Toyota and Volkswagen.

If Nissan votes to keep Uchida and walk away from the Honda merger for good, it still has a keen player in the shape of Taiwanese phone maker Foxconn. The iPhone producer indicated last week it remained keen on a collaboration, with chairman Young Liu saying that while it was open to buying a stake in the carmaker, its main goal was a “cooperation.”

Foxconn has aspirations of becoming a fully-fledged carmaker, and such a partnership would see it build vehicles for Nissan or even Renault or Honda. Ironically, the company’s interest in Nissan may have started the ball rolling on the Honda merger in the first place – in December, Foxconn’s EV chief strategy officer and former Nissan executive Jun Seki met with Renault boss Luca de Meo to discuss purchasing shares in Nissan. The latter was spooked by this, leading to negotiations with Honda.

Now that those merger talks fell through, Nissan is seeking a new partner, but clearly not Foxconn. Bloomberg reported that the company was seeking a collaborator that was ideally both from the technology sector and US-based, according to sources familiar with the matter.

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