- Nissan and Honda cancel their fusion of $ 50 billion “to prioritize decision-making speed,” they said.
- The merger would have created the third world car manufacturer in sales volume.
- The two car manufacturers face challenges with the drop in sales and the slow transition to the manufacture of electric vehicles.
Japanese car manufacturers Nissan and Honda have canceled a fusion of $ 50 billion which would have formed one of the largest automotive companies in the world.
The two companies declared Thursday in a press release that they canceled the agreement “to prioritize the speed of decision -making and the execution of management measures” as an “increasingly volatile market” is heading for a Electricity-Vehicle era.
Car manufacturers have said that they would continue to work in “the framework of a strategic partnership” in the future.
Nissan and Honda announced for the first time that they were starting merger talks at the end of December. If the merger had taken place, it would have created the third automaker in the world by sale.
In December, the former CEO in disgrace of Nissan, Carlos Ghosndescribed the agreement as “desperate despair” for Nissan because he saw little complementarity.
“This is not a pragmatic agreement because frankly, the synergies between the two companies are difficult to find,” said Ghosn at the time.
Between 2001 and 2017, Nissan was led by Ghosn, who was arrested in Japan for suspicion of financial misconduct during his mandate as CEO of the company. In 2019, when he was under house arrest, he escaped from Japan to Lebanon by hiding in a large box which was shipped in cargo on a private jet.
Car manufacturers in difficulty
The end of the merger talks arrives at a difficult time for the two Japanese car manufacturers.
Nissan has struggled to lower profits and reduce sales worldwide in the past year. The company faces a drop in sales in China due to competition from a multitude of local players. It was slow to produce electric or hybrid vehicles, which have been in demand compared to the models only of gas.
In the United States, sales of Nissan electric vehicles have Sufficient because they are not eligible for the $ 7,500 in American government tax credits for cars built in North America.
In November, the company reduced 9,000 jobs worldwide in an attempted cost reduction and began a voluntary buyout during the summer.
Honda, meanwhile, has lagged behind Chinese players in the transition to electric vehicles and has invested less than other rivals in new cars’ conceptions and technologies.
Nissan’s shares have experienced a rout of 26.5% in the past year, while Honda’s shares have dropped by 20% at the same time.
businessinsider
