Honda and Nissan Shares Soar on Reports of Possible Termination of Merger Talks

On Wednesday, shares in Honda and Nissan exhibited an increase after reports from the Asahi Shimbun, a local newspaper, indicated that both automakers are considering ending their merger discussions.

Following the report, Nissan shares surged by as much as 7.4%, while Honda’s rose by up to 4.2%. The merger talks reportedly stalled due to disagreements, with Honda proposing to make Nissan a subsidiary—a proposal Nissan opposed.

Karl Brauer, executive analyst at automotive research firm iSeeCars, suggested that the rising stock prices indicate a decrease in immediate uncertainty for investors. However, both automakers still face an unclear long-term trajectory with several challenges ahead.

The merger negotiations had been officially announced last December, with a conclusion expected by June. Such a merger could have positioned the companies as the world’s third-largest automaker by sales.

In addition, Nissan’s alliance partner, Mitsubishi, was also invited to join the merger, with a decision anticipated around mid-February or later.

The proposed merger was seen as a move to address Nissan’s financial struggles and to restructure its longstanding partnership with France’s Renault. In its second-quarter announcement, Nissan revealed plans to cut 9,000 jobs and reduce its global production capacity by 20%.

The global auto industry is undergoing significant disruption due to the rise of electric vehicles, challenging traditional automakers.

Nissan has faced difficulties in its key markets, including the U.S. and China, as well as other emerging regions. On an annual basis, the company observed a 90% drop in operating profits and a 94% decline in net income in the first half of fiscal year 2024.