Tokyo (Reuters)-Nissan is ready to cancel fusion negotiations with rival Honda, a source said on Wednesday, leaving a union of over 60 billion dollars that would have created the third largest vehicle automaker in the world and Raising questions about how the company will restructure its business alone.
Union discussions have been complicated by the growing differences between the two Japanese automakers, they previously said two sources familiar with the subject.
A is in the middle of a recovery plan in which it intends to fade 9,000 employees and reduce its global capacity 20%.
Honda, Japan’s second largest car manufacturer, behind Toyota, and Nissan, the third largest, said in December that they were in negotiations to create the world’s third largest automaker in sales, strengthening in an industry in a sector facing increasing Chinese BYD competition and other electrified car manufacturers.
Reuters previously reported that Nissan could end the negotiations after Honda probed her about the possibility of becoming a subsidiary. Nissan refused because that would be a deviation from what was originally conceived as a fusion of equals, said a source
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Sought, Nissan and Honda said in separate comments that they intend to finalize a position on the future direction until mid-February to announce it at the time.
Honda, whose market value of about 7.92 trillion yen ($ 51.9 billion) is more than five times higher than Nissan’s, was increasingly concerned about the progress of the smaller rival in its plan of recovery, said a second source.
Negotiations on the Union coincided with the disturbance caused by possible imports of imports frequently propagated by US President Donald Trump. Tariffs against Mexico will be more painful for Nissan than to Honda or Toyota, according to analysts.
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“Investors can worry about Nissan’s future (and their) turnaround,” said Vincent Sun, an analyst at Morningstar, adding: “Nissan also has a higher risk exposure to the US and Mexico rates than Mexico than Honda and Toyota ”.
Nissan’s long -term alliance partner, Renault, had said that it would be open in principle to the merger with Honda. The French automaker has 36% of Nissan, including 18.7% through a French fund.
Sources told Reuters last month that Mitsubishi Motors, Nissan’s smaller partner in the Renault alliance and had considered to participate in the merger, may not participate in the business.
