Merger talks between Japanese car giants Nissan and Honda are reported to have broken down.
News of the difficulties comes only weeks after the two firms confirmed negotiations were under way over a multibillion-dollar merger that could create the world's third largest car maker. Fresh reports originating from Japanese financial newspaper Nikkei suggest Honda executives proposed making Nissan a fully owned subsidiary.
The reports cite people close to the negotiations who say the move from Honda is counter to the original memorandum of understanding between the firms which set out to merge under a joint holding company. Under the agreement it was expected that Honda would nominate the majority of directors the company.
In a joint statement confirming the talks in December, Nissan and Honda said the move could bring about standardised vehicle platforms, enhanced research and development capabilities and competitive advantages across the supply chain. An end of January deadline for the talks had been set, but this has since been extended to mid-February.
The surprise negotiations follow a challenging time for Nissan, which described its financial situation as "severe" at the time of half year 2024 results showing operating profits plummeted by 303.8bn yen (£1.59bn) in the six months to the end of September, amid falling sales. A turnaround plan was set in place including cutting 20% of global production and shedding of 9,000 jobs globally. CEO Makoto Uchida even volunteered to cut his monthly salary in half.
The impact on Nissan's Sunderland plant, which employs about 6,000 people and supports many more in the North East-based supply chain, is unknown - though multibillion-pound plans are in place to produce three all-electric models at the factory, powered by renewable energy. And in recent weeks, Japanese transmissions maker Jatco - which is majority owned by Nissan - announced it is investing £48.7m in a nearby factory to support the electric vehicle production
In a statement issued in response to the recent media reports, Nissan said: "There was some media coverage regarding the integration discussions between Honda Motor Co., Ltd. and our company, stating that our company has withdrawn the basic agreement for the merger with Honda, but this matter has not been announced by our company.
"Based on the memorandum of understanding signed on December 23 last year, Honda and our company are in the stage of advancing various discussions, including the contents of the report, and we plan to establish a direction and make an announcement around mid-February."
Separately, new figures from the Society of Motor Manufacturers and Traders showed registrations of new cars fell by 2.5% last month. The industry body said 139,345 new cars were registered in the º£½ÇÊÓƵ in January, compared with 142,876 during the same month last year.
The fall was driven by a 15.3% drop in deliveries of petrol cars. There was a 41.6% spike in the uptake of pure battery electric cars, resulting in a market share of 21.3%.
