Honda and Nissan are planning to merge or at least that was the talk as recently as January 2025. The two Japanese automakers announced their intention to form an alliance in December 2024, with talks ensuing just weeks later. However, the merger appears in jeopardy due to one important demand: that Nissan become a subsidiary of Honda.
Talks and Intrigue
Rumors of a Honda-Nissan alliance circulated in late 2024, then were soon confirmed by both automakers. Mitsubishi was invited to join the alliance, but eventually declined, deciding to continue its current relationship with Nissan. Nevertheless, the two Japanese automotive giants began moving forward, with expectations that a deal would conclude early this year with the official merger happening in 2026.
But Honda may have scuttled the deal when it demanded that the alliance of equals take a different path. Specifically, Honda said it wanted Nissan – not as a partner – but as a subsidiary according to Automotive News. This means Honda would be in the driver’s seat with Nissan simply a part of the conglomerate.
Not surprisingly, Nissan executives pushed back and rejected Honda’s initiative. The agreement is not quite dead, but with the current impasse, it may soon wither away.
Nissan’s Plight
Nissan clearly needs the alliance more than Honda. The two automakers are benefitting from strong support from the government, which believes the pair working together makes it a stronger entity than going alone. Notably, such headwinds as financing costly electric vehicle technologies, meeting stringent government regulations, and battling strong Chinese brands weigh heavily in that push.
Another factor is Renault, which owns a significant chunk of Nissan. The French automaker has been relatively silent about the talks, but it will also have a say in the matter. Renault could divest itself of Nissan and walk away with billions of dollars. But that would leave Renault vulnerable long term as its own position in the global market erodes. Nissan serving as a Honda subsidiary might not look particularly appealing to the French who must protect their own interests.
In 2024, Nissan’s U.S. sales rose marginally, but that came at a substantial cost. Namely, heavy discounting and the continued attrition of its luxury Infiniti brand. Infiniti once served as a profit center for the brand, but its shrinking and dated model line has taken its toll. Sales fell by 10 percent in 2024 to just over 58,000 units, putting it far behind the competition. Another struggling luxury brand, Lincoln, has found its footing in recent years, selling more than 100,000 vehicles for the first time in years. Can Nissan revive Infiniti as Ford has done with Lincoln?
Model Line Weakness
Nissan does have several strong models available, including the midsize three-row Pathfinder utility vehicle. Its Frontier midsize pickup truck and compact Rogue crossover also command notice in their respective segments.
But this Japanese automaker exited the full-size pickup truck market when it canceled the Titan. Its Maxima sedan is also gone, while its once-popular midsize Altima is in its final year. Nissan plans to pivot to electric vehicles, a move that it initiated with the Leaf in 2011, but has since seen competitors surpass it. Further, the Trump Administration is showing that it isn’t supporting the EV transition pushed by the Biden Administration, while consumer demand continues to prove tepid at best.
Looking Ahead
If Honda and Nissan cancel their proposed alliance, that doesn’t preclude the two automakers cooperating on model development under a smaller scale. However, a full-blown merger would enable the two companies to scale savings across their respective portfolios, enabling them to compete effectively in a consolidating industry.
So, what is our prediction? We believe the Japanese government will pressure the two companies to work out some type of agreement that is satisfactory to both. Japan remains very dependent on automotive manufacturing and any loss of jobs could prove detrimental to its economy.
See Also — Nissan, Honda, Mitsubishi Explore Merger
