Nissan rejects deal to merge with Honda: find out why

After deliberations, Nissan decided to withdraw its merger proposal with Honda because it did not agree to some of the terms of the agreement.

Honda deviates from original plan

The two Japanese auto giants have failed to reach an agreement on a final merger that was planned for the end of January but has been postponed until February.

Nissan and Honda signed a memorandum of understanding last year to begin merger talks. This was prompted by increasing competition in the auto market as companies increasingly switch to electric vehicles.

The companies believed that combining resources - technology, human resources and knowledge - could increase the overall value of the companies.

However, Honda deviated from the original plan.

Honda offered Nissan a take-it-or-leave-it offer.

Honda is believed to have made this decision due to its larger market capitalization of around €37 billion compared to Nissan's €9.6 billion.

Honda's advantage

One of Honda's main advantages over Nissan is its advanced production of electric vehicles, where the latter has yet to make a significant dent.

As the auto industry rapidly transitions to electric vehicles, Honda could be a major lifeline for the Japanese automaker.

Last month, the company announced plans to introduce affordable electric vehicles to the U.S. market to compete with gasoline-powered models, especially after President Donald Trump eliminated subsidies for electric car buyers.

Honda has also updated some of its older models with electric versions, signaling that the company is seriously investing in the future of electric vehicles.