TOKYO, Japan(Reuters) – Nissan looks set to step back from merger talks with rival Honda, two sources said on Wednesday, calling into question a $60 billion tie-up to create the world’s no.3 automaker and potentially leaving Nissan to drive its turnaround alone.
Talks between the two Japanese automakers have been complicated by growing differences, according to multiple people familiar with the matter, all of whom declined to be named because they were not authorized to speak to the media.
Reuters reported earlier that Nissan could call off talks after Honda sounded it out about becoming a subsidiary. Nissan baulked as this was a departure from what was originally framed as a merger of equals, one of the people said.
It was not immediately clear if the merger could survive, with comments from the two sources appearing to leave open the option for a restart.
Honda, whose market value of about 7.92 trillion yen ($51.90 billion) is more than five times bigger than Nissan’s at 1.44 trillion yen, was increasingly worried about its smaller rival’s progress on the turnaround plan, another source said.
Honda is Japan’s second-largest car maker behind Toyota, and Nissan is the third-largest. The two said in December they were in talks to create the world’s third-largest automaker by sales, a move that would allow them to bulk up in an industry facing a huge threat from China’s BYD and other electric vehicle entrants.
The talks have also coincided with disruption posed by potential tariffs from U.S. President Donald Trump.
“Investors may get concerned about Nissan’s future (and) turnaround,” said Morningstar analyst Vincent Sun, adding: “Nissan also has a larger risk exposure to U.S.-Mexico tariffs than Honda and Toyota”.
