Nissan and Honda executives addressing media
After some deliberations, Nissan has backed out of its long-awaited merger proposal with Honda over the terms of the deal.
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According to a February 5 report, the two Japanese auto giants were unable to reach an agreement on the final merger which was expected by the end of January but postponed till February.
Nissan dissatisfied
As Techgaged reported last year, Nissan and Honda signed a memorandum of understanding to enter into a merger talk for the two companies as competition in the auto market heated up in light of the transition to electric vehicles.
Ideally, the two companies would combine resources such as technology, human resources, and knowledge to boost their collective value.
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However, Honda allegedly deviated from the plan and proposed that Nissan be made its subsidiary in a “take it or leave it” offer.
It is said that Honda made the decision because of its higher market capitalization of £31 billion as against Nissan’s £8 billion.
Honda may also be exploiting the fact that the U.S.-Mexico tariff war initiated by president Donald Trump could have a more devastating effect on Nissan, giving the company little choice than to concede.
Meanwhile, French automaker Renault, which holds a reasonable share in Nissan, is open to the Honda offer if Nissan can secure a better deal.
Honda’s edge
One of the advantages Honda has over Nissan is its advancement in electric vehicle manufacture, an area that Nissan hasn’t interred into much.
Because of the changing trend in the auto industry that favors electric vehicles, Honda may just serve as a lifeline for Nissan.
The company announced late last month that it plans to launch cheap electric models in the U.S. to compete with gasoline vehicles as Trump removed the incentives for EV buyers.
Honda has also reintroduced some of its old models with electric designs, suggesting it is planning big on the EV industry.
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