Honda Open to Reopening Merger Talks if Nissan CEO Steps Down Amid Financial Struggles

Honda signals willingness to restart merger discussions with Nissan if CEO Makoto Uchida exits due to ongoing financial troubles and leadership challenges / AFP

Honda, Japan’s second-largest automaker, has expressed potential interest in reviving merger discussions with Nissan, Japan’s third-largest car manufacturer, should Nissan’s CEO, Makoto Uchida, step down. The decision comes amid growing concerns over Nissan's financial stability and restructuring pace. According to sources cited by the Financial Times on February 17, Honda is open to re-engaging in merger talks if a new CEO, capable of managing internal resistance, replaces Uchida.

Uchida, who has been a strong advocate for a partnership with Honda, has faced increasing pressure within Nissan, particularly regarding Honda’s dissatisfaction with the speed of Nissan’s restructuring efforts. This led to the halt of the merger talks last year when Honda insisted that any deal would require Nissan to become a wholly owned subsidiary, rather than establishing an independent holding company as initially discussed.

While Uchida has expressed intentions to remain in his role until at least 2026, his leadership is under scrutiny following the collapse of a significant $5.8 billion deal with Honda. This failure has resulted in increased pressure from Nissan’s board, who are reportedly discussing his potential departure. Uchida has indicated his willingness to resign if Nissan regains its financial footing, acknowledging the responsibility that comes with leading the company through these challenging times.

Honda remains interested in a merger, seeing value in Nissan’s capital ties with Mitsubishi Motors, its plug-in hybrid technology, and strong presence in Southeast Asia. Honda’s CEO, Toshihiro Mibe, has previously expressed regret over the failed deal, signaling his openness to resuming negotiations under new leadership at Nissan. “If business integration talks are revisited, we are not entirely ruling out the possibility of resuming those discussions,” Honda stated.

In the wake of these developments, Nissan has faced severe challenges. The company is grappling with sluggish sales and mounting debt repayments, prompting the search for alternative investors. Taiwanese tech giant Foxconn has expressed interest in acquiring Nissan shares to venture into electric vehicle production. Foxconn's Chief Strategy Officer, Jun Seki, a former competitor for Nissan’s CEO position, previously led talks with Renault regarding the potential acquisition of Nissan shares.

The idea of Nissan being acquired by Foxconn has raised concerns in Japan due to the company’s perceived ties with China, leading to more radical suggestions. Reports indicate that global private equity firms, including KKR, which owns Nissan’s automotive parts company Marelli, along with other tech companies from the U.S., are considering investing in Nissan. A consortium of investors may form to share the costs and risks involved in such an acquisition, with some proposals considering the possibility of U.S. automakers increasing their footprint in the country to counter tariff policies set by President Donald Trump.

Meanwhile, Renault, a major partner of Nissan, has resumed talks with Foxconn, planning to sell its 36% stake in Nissan at a premium price. Analysts believe that while potential buyers may hesitate to act immediately, it is Nissan that is in urgent need of securing a deal to stabilize its financial outlook.

Nissan’s internal sources stress the necessity of securing enough liquidity to avoid a vicious cycle of rising restructuring costs and increased borrowing rates due to its credit downgrade. The company’s credit rating from S&P has fallen to a “junk” level, indicating high investment risk, while other agencies have barely maintained their investment-grade ratings.

This unfolding situation highlights the financial turbulence at Nissan, the evolving dynamics with Honda, and the potential restructuring of the Japanese automotive sector. As the crisis deepens, stakeholders will closely monitor how these negotiations and leadership changes shape the future of these two major players in the global automotive industry.